Chapter 1: What is the main topic discussed in this episode?
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Chapter 2: What verdict did the ACCC deliver against Coles?
A huge win for the ACCC and a big signal to the supermarket giants as a verdict comes down down on Coles. And Commonwealth Bank shares plummeted yesterday, falling more than 10%. But is it fair to link it to the taxation changes in the budget? Welcome to ABC Business Daily.
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I'm Carrington Clarke. And I'm ABC Business Reporter Daniel Ziffer. Dan, it's important to timestamp this one because we have just been listening into the head of the ACCC reacting to this blockbuster result where the judge has found in favour of the ACCC's case that Coles misled customers and broke consumer law with its down-down promotion.
Now, a lot was riding on this particular judgment for the ACCC in part because they also have a Similar case running at Woolworths. We're waiting to see exactly what the judgment is in this case. But let's look at the headlines first. What do you make of this judgment?
This is a big win for the consumer regulator. They took a very big swing against one of our biggest retailers. As you mentioned, they're essentially running these two cases in parallel. This one has concluded. The other one is still going. So in the press conference, we just heard from
the chair of the ACCC, Gina Cascott-Leib, pretty careful in her remarks because that other court case is still going. If they didn't win this one, they couldn't win anything. When we had these examples of a product being at a particular price for a very long period, say two years,
and then briefly increased to a much higher price, say for 10 days or a couple of weeks, and then reduced from that highest price, but to a price that is still higher than the original long-term price and have a big discount sticker put on it. If that couldn't be found to be essentially misleading, then we're in a really semantic and weird space.
So a substantial win for the ACCC and something that will probably bring a bit more clarity for consumers going forward.
Jenna Cascott-Libb, the chair of the ACCC, was very careful. As you said, she wouldn't be drawn on any comparisons. to the case that is being run against Woolworths for obvious reasons. We're waiting for the decision on that. But this was an interesting case, and she said that there's been very interesting analysis done about the way that companies are able to price.
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Chapter 3: How does the Coles case relate to consumer law?
To get to the level of concentration, that you'd need to in the supermarket market, let's say, for example, with Coles and Woolworths being the two biggest players. I think in America, you'd need to cobble together five or six of their biggest players to get to the same amount of market concentration. And those are multi-billion dollar businesses.
So we do have in a lot of our retail, some really concentrated spaces. There's a lot more to come on what is legitimate pricing changes and what is taking advantage of the market.
Yes, I think usually people talk about Coles and Woolworths controlling about two-thirds of the total spend. I mean, what is interesting, though, is that basically Coles and Woolworths in their separate cases are claiming there is fierce competition.
And part of the reason that we saw this particular practice where they had an original price, it gets bumped up to a new price and then discounted and discounted even quicker is than the guardrails will allow is because they're looking at what the other guy is doing and saying, well, they seem to be doing this.
So we're going to do a similar thing because we can't let them steal market share from us. And so on one hand, there is competition. But as you say, they're also so massive that they have huge power, particularly when it comes over suppliers. And for a lot of Australians, they are the kind of only option
when you're going to go and do a big supermarket shop, which is why there is a consumer watchdog keeping an eye on it. The ACCC did have a lot riding on this. There was concern that if they lost this case and, you know, we still don't know what's going to happen with Woolworths. People are trying to draw a lesson. We'll wait to see what happens.
But if they had lost these two cases, then potentially there would have been a real question mark over how much power it did have to regulate this type of practice, the power to keep an eye on how pricing is happening. This does seem to be a big win for them. What it also means is they're probably going to be more courageous in going after other pricing practices.
So perhaps we are going to see even more legal matters coming to the fore as the ACCC flexes this muscle.
Well, the ACCC has always been, I would say, the most aggressive in regarding to taking court action. The most impactful has probably been AUSTRAC, just because they decided that the model they would use is fines so large that everyone has a sharp intake of breath when they hear them. They've doled out $700 million to the Commonwealth Bank, others to Crown and casino groups.
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Chapter 4: What internal rules did Coles violate regarding pricing?
And given that it's grandfathered, which means that it's going to be essentially red-circled and kept for existing houses, it's a really slow drop-off. So about 5% of houses... go up for sale or transfer ownership in a year. So if you look at a street of houses, there's 20, one of them changes a year, right? That's really slow. So I never thought it was going to have an immense impact.
And like I said, this committee report says it's going to have a larger impact than the Commonwealth Bank thinks it'll have, than Treasury thinks it'll have. You're just going to see a slowing in the growth. And it's In recent years, you've had people kind of tearing their hair out about prices falling or slowing in the growth. What they don't look at is the longer graph.
You stretch the graph out 15 years rather than one year, and you're looking at prices that have doubled, tripled, quadrupled for an asset that is inert and people require to live in. It's quite an interesting graph. way of financialising our lives.
We've really done, in many ways, immense damage to ourselves by focusing so much on putting so much of our money into inert objects that we live in rather than, say, research and development shares or companies. So, you know, this is probably a rebalancing, and that's for the politics of it to deal with. For the Commonwealth Bank, yeah, again, similarly, a rebalancing.
You know, they are the biggest bank, so they're very subject to the vagaries of the Australian economy. At the moment, 20% of the world's oil is stuck. That means we've got 20% less to play with. And there are things we can do to affect that. None of them are quick. The easiest thing we have to do is to compete on the basis of price by paying more. So these impacts are happening.
This is not the first thing that said that. We've had the RBA. We've had the Treasury updates. Until the straightforward moors opens, we're not going to kind of go close to normalising the situation we're in. And pretty much since the second Trump administration, we have just had a massive injection of uncertainty into every element of trade. This is just more.
Yeah, it's been fascinating to see how this played out. And yes, I think the government would have been unhappy that the Commonwealth Bank decided to update the day after the budget, and maybe there'll be a timing issue. change for future years. I don't think the Commonwealth Bank thought it was that good an idea either by the end of it.
Yeah, it's been a massive kind of week and a half, hasn't it? Reserve bank decision, budget, now Commonwealth Bank update. Fascinating. Now, that is it for today's episode of ABC Business Daily. And Dan, we'll be hearing a bit more of you over the next couple of weeks as you jump into the hosting chair while I take a little breather.
Yes, looking forward to it.
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Chapter 5: What implications does the ACCC's win have for other retailers?
I shall keep the chair warm from you. I'll be there from Monday and we shall see you in a fortnight.
Now, remember to never miss an episode. Make sure you're following ABC Business Daily on ABC Listen or wherever you get your podcasts. If you'd like to send in a question, remember, email abcbusinessdaily at abc.net.au. Catch you next time, Dan, and enjoy. All the best.