The Australian Competition and Consumer Commission has forced grocery wholesaler and distributor Metcash to amend its agreements with suppliers as a result of concerns expressed in the competition watchdog’s review of the supermarket sector.The ACCC was specifically concerned with arrangements where suppliers of Metcash that supplied Metcash’s customers (mainly independent supermarkets) had to arrange rebates to Metcash for products that were also stocked by Metcash’s distribution division, called IGA>D.Suppliers that sold to Metcash’s customers had to provide details of these sales to the wholesaler each month.The ACCC decide to examine whether these arrangements could contravene anti-competitive conduct provisions of the Trade Practices Act.
The watchdog was worried the rebate and reporting arrangements could act as a disincentive for suppliers to sell directly to retailers by making it economically unattractive.
These retailers would also have their choice of supplier restricted, which could increase the cost of direct supply and potentially reducing the discounts that might otherwise be made available to the retailer – meaning higher prices for consumers.Metcash has agreed to remove the requirement to report direct delivers to Metcash from its supplier agreements.
But the ACCC’s examination of the company is not over.“The ACCC is… continuing to make inquiries in relation to Metcash’s arrangements with its retailers, including arrangements where retailers are required to purchase all of their products or certain percentages of their products from Metcash,” the watchdog said in a statement.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
