1 2015 MGA NATIONAL SURVEY OF ATTITUDES TO SUPERMARKET CONCENTRATION www.mga.asn.au 1800 888 497 admin@mga.asn.au
2 MGA/LRA MEDIA RELEASE Survey of attitudes to supermarket concentration Master Grocers Australia/Liquor Retailers Australia has released findings from a groundbeaking national survey of attitudes to supermarket competition and market concentration in Australia. Key findings are: A large majority of Australians 72% believe the grocery market is too dominated by Coles and Woolworths and that there is not healthy competition (the duopoly controls 75-8 of the market) Only 22% believe there is healthy competition A large majority 75% say competition laws should be strengthened The motivation to strengthen laws is a fundamental belief that healthy competition delivers a range of benefits: οο Lower prices (83% agree) οο Greater choice and variety of goods and services (86% agree) οο A generally fairer society (82% agree) 79% see it as very or fairly important for the ACCC to have the legal power and resources it needs to fulfill its charter, including halting anti-competitive practices. Many consider the ACCC to be toothless at the moment. 9 believe it is important for local independent supermakets to survive MGA/LRA CEO, Jos de Bruin said: Most of us know that the existing competition laws have permitted Coles and Woolworths to gain extreme market domination, up to 8 of the grocery market. This survey shows a large majority of people believe there is something wrong with this state of affairs. They think the duopoly s market concentration has already gone too far and they don t believe there is healthy competition. They are concerned that they are the losers in terms of price and they want much more choice and variety. As one of the survey respondents put it: more of the same is not competition. But they are also concerned about the wider impact on our society. They perceive there is an unfair impact on Australian farmers and suppliers who have been forced to bow down to the market power of the Big Two. Many also mentioned preserving local jobs and creating a level playing field for small businesses against large ones. The survey shows a great deal of support for strengthening the competition laws to create healthy competition. Specifically the survey shows a high level of support for introducing an effects test. The effects test which would give the ACCC more power to stop Coles and Woolworths misusing their market power or engaging in anti-competitive behaviours which would have the effect of killing off competition. As far as we are concerned it is one minute to midnight for competition in the grocery sector and we will be working with the Federal government to convince them that action needs to be taken now. Background: The MGA/LRA survey has been conducted against the backdrop of a root and branch review into Australia s competition laws. An independent committee of experts chaired by Professor Ian Harper made an interim finding in late 2014 that an effects test should be introduced into Australian competition law. The Harper review has since completed its final report to the Minister for Small Business, the Hon Bruce Billson MP. Technical note: The MGA/LRA national survey polled the views of 1,000 Australians via an online survey conducted in late January. The margin of error is 3%. Its findings are informed by focus group discussions conducted in metropolitan and regional Australia.
3 SURVEY OF AUSTRALIAN ATTITUDES TO MARKET CONCENTRATION IN THE GROCERY SECTOR: KEY FINDINGS The survey was based on a representative national sample of 1,000 adult Australians, interviewed online. Age, gender and regional quotas were used. Fieldwork was conducted between the 23 and the 30 January 2015. The sample of 1,000 carries a margin for error of +/-3.1% Coles and Woolworths dominate the market but more than half shop at a local independent supermarket 8 of households buy most of their groceries at Coles (42%) or Woolworths (38%). The chart below depicts their market dominance. 45% At which store does your household buy most of its groceries? 35% 3 25% 2 15% 42% - Coles 38% - Woolworths 9% - Australian Independent Supermarkets 9% - Aldi 1% - Somewhere else 1 5% The chart below indicates that more than half - 52% - shop at a locally owned independent at least once a month on average. 44% do the same at Aldi. Do you (yourself only) buy something from the following stores at least once a month on average? 10 8 6 79% - Coles 81% - Woolworths 52% - Australian Independent Supermarkets 44% - Aldi 2
4 Australians strongly support strengthening competition laws with an effects test A big majority of Australians 75% - supports strengthening competition laws by replacing the purpose test with the effects test. Just 9% are opposed. (Note: this question was asked after the effects test had been explained to respondents). The main reasons respondents gave on an unprompted basis - for supporting stronger competition laws were: It would lead to lower prices (43%) It would bring other consumer benefits such as quality, choice or service (11%) Coles and Woolworths are already too dominant (12%) Competition in Australia generally is not strong enough (11%) It would help small business suppliers to large corporations (11%) What is clear is that Australians expect that stronger laws would make themselves - and small business suppliers - better off. Politically, support for the effects test is identical amongst Labor and Coalition voters at the federal level both at 78%. This is not a Liberal or National versus Labor issue. Instead, it is a reform highly suited to a bipartisan approach between the major parties. 8 7 6 5 Do you support or oppose strengthening Australia s competition laws? 75% - Support 9% - Oppose 16% - Unsure 3 2 1 Australians strongly believe in healthy competition A consistent theme is that Australians fundamentally believe that healthy competition provides a wide range of benefits, both to them as consumers and to society in general. Around eight in ten Australians believe that healthy competition increases the levels of choice and variety, quality and better prices available to consumers when they buy goods or services. At the same time they believe it also promotes a fairer society. Do you agree or disagree that healthy competition increases the following benefits for consumers? 10 9 8 86% 83% 82% 79% Agree 7 6 5 Disagree Unsure 3 2 1 9% 5% 12% 5% 12% 6% 15% 6% Greater choice and variety of good and services Lower prices A generally fairer society Higher quality of goods and services
5 Competition in the grocery market is not healthy a large majority believes the Big Two dominate too much Despite the desire for competition, just 22% consider competition in the market for groceries to be healthy, while a big majority of 72% believes the Big Two dominate it too much (chart below). Do you think competition in the market for groceries In Australia Is healthy or is it too dominated by Coles and Woolworths? 8 7 6 5 22% - Healthy 72% - Too dominated by Coles and Woolworths 6% - Unsure 3 2 1 The survival of independent supermarkets is important The chart below shows that: 49% consider it very important that the Australian owned independent supermarkets that operate in or near your local area survive Nearly everyone, 9, considers it at least a little important Only 4% say it is not important at all to them. The desire for local independents to survive is slightly stronger in regional areas where it is easier for large supermarkets to dominate local retail. How important is it to you that the Australian owned independent supermarkets (such as IGA, FoodWorks, Foodland, Farmer Jacks, Supabarn, SPAR and Friendly Grocers) that operate in or near your local area survive? 6 5 3 2 1 9 49% - Very important 3 - Fairly important 11% - Only a little bit important 4% - Not important at all 4% - There are none in my local area 2% - Unsure
6 Independents are well regarded Australians like all their local supermarkets. Roughly seven in ten hold a positive opinion of their local Coles, Woolworths and independents while about half feel positive towards their local Aldi. Only 12% feel negative towards local independents, giving them a superior positive: negative ratio of 5.8. (a measure which reflects that several people don t have one or an Aldi near them). The survey makes clear that people want more competition and choice in supermarkets. The importance they attach to the survival of local independent supermarkets is built around two pillars: Their importance to the level of competition in grocery markets. That people hold them in high regard. Positive % Negative % Positive to negative ratio % Your local Australian owned independent supermarket (e.g. IGA store) 7 12% 5.8 Your local Coles supermarket 75% 17% 4.4 Your local Woolworths supermarket 74% 19% 3.9 Your local Aldi's supermarket 53% 16% 3.3 Australians also want a stronger ACCC Nine in ten Australians consider it very or fairly important that the ACCC has the laws and the resources to fulfill its role as explained on its website to promote competition and fair trade in markets to benefit consumers, businesses, and the community and to take action to stop conduct that is anti-competitive or harmful to consumers. Further, 91% believe it is important that the ACCC also ensures big companies treat small business suppliers fairly. The survey also found large majority support for actions the ACCC has already taken against: Coles for demanding ex-contract rebates (83%) Woolworths for margin maintenance payments (78%) Both for cross-subsidising fuel dockets to persuade people from shopping at competing supermarkets. How important is it that the ACCC be given the legal and resource backing to carry out this role effectively? 8 6 2 89% 58% - Very important 31% - Fairly important 4% - Only a little important 1% - Not important at all 5% - Unsure