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MEDIA RELEASE: Federal Court – Woolworths “Mind the Gap” Ruling a great disappointment!

9 December, 2016

Yesterday the ACCC lost its “unconscionable conduct” case against Woolworths Ltd in the Federal Court. Congratulations to ACCC Chairman, Rod Sims and his team, for having the courage to take Woolworths to task for their unacceptable and unconscionable behaviour toward their suppliers.

The ACCC’s role is to protect vigorous and robust competition amongst businesses for the benefit of consumers. Its role is to protect smaller businesses from the anti-competitive and exclusionary behaviours that can only exhibited by large businesses with significant market presence. The ACCC deemed the Woolworths “Mind the Gap” program as being an example of unconscionable behaviour, conduct that is not utilised by good corporate citizens.

Woolworths Chairman, Gordon Cairns and its Board of Directors, have shown a ruthless contempt of Australian values and community, treating big, fat profits as more important than their suppliers’ businesses and the people they employ. This is simply not fair!

Short term profit versus long term supplier hardships.

Whilst we respect and reluctantly accept the federal court ruling, there is little doubt this decision would not pass the wider public standard of responsible corporate conduct.

Consumers, suppliers, governments and bureaucrats know that Woolworths is a very powerful and dominant business with massive resources at its disposal and as such, is able to bully suppliers to get what they want. In this case Woolworth’s profits were lagging, they had “a profit gap” and so who should they turn to raise additional revenue?  Their suppliers of course, many of whom are small to medium businesses.

Margins are small in the grocery industry, so the additional hard earned monies sucked from grocery suppliers, which would otherwise have been allocated to research, innovation or investment back into their businesses or even more employment is lost. The result is a loss for our productivity, economy and communities.

This unscrupulous conduct is a potential disastrous setback for the independent supermarket sector.  Supplier promotional and business development funds, that were once available to this sector, are unfairly apportioned to Woolworths, thus depriving the independent sector of the ability to invest in their consumers and compete on a level playing field in the market place.

The dominance and power of Woolworths is unprecedented…sales are down and margins are stressed due to their own inefficiencies – does that give Woolworths the right to drain their suppliers who are already subservient to them, particularly since they command some 40% grocery market share?

We will watch from the sidelines, as yet again big business wins over the small and less powerful businesses. We will see if Woolworth’s  unpalatable  business practices change in favour of building “win/win” partnerships with their grocery suppliers who employ thousands of hard working Australians.

For further comment contact:

Jos de Bruin

CEO – MGA Independent Retailers

Office contact: 03 9824 4111
Mobile contact: 0418 312 723