Unconscionable behaviour in business, says the Australian Competition and Consumer Commission, goes beyond usual hard bargaining to become harsh or oppressive: something, it suggests, that should keep a manager with a good conscience awake at night. This rather fuzzy transgression is what the ACCC alleges that Coles has been up to in demanding 200 of its suppliers cough up a rebate of up to 1 per cent of their sales in exchange for using Coles’s new streamlined logistics system – or else be promptly booted off the shelves.
Coles says that it is a payment to share the benefits of their new logistics system. The ACCC says suppliers were given just days to assess whether the proposition could work for them: not so much a genuine offer as Coles simply using its weight as a duopolistic store chain, the kind of thing the ACCC classes as unconscionable bullying.
But the competition watchdog has to be careful not to blunt the gains by consumers from the genuine, price-slashing rivalry brought into Australian supermarket retailing since Wesfarmers bet the ranch in 2007 that it could turn Coles around. It seems unlikely that Coles managers have lain awake at night, because a hard-nosed approach to getting goods onto its shelves has been critical to this success. Coles has been willing to challenge some of the world’s biggest multinational suppliers to do so, as vigorous competition at the retail level has put overdue pressure on inefficiencies up the supply chain.
Such competition also has generated the innovation of petrol discounts for supermarket shoppers. Boiled down, the product the supermarkets are really selling is convenience. The ACCC has pounced on that, too, even at the risk of pushing up petrol prices, and inconvenience, for many shoppers.
This is not some trite point: more telling is the fact that no politician has ventured into a supermarket to denounce a dollar loaf of bread or litre of milk.
Coles has power but no monopoly. ACCC is supposed to concentrate the unconscionable conduct part of its act on protecting consumers but instead, now that the socialists are even more ensconced in its management, they are trying to redefine competition. The organisation needs to be downsized and redirected to its core responsibilities of addressing monopoly.