The Emerson Report on supermarket gouging of suppliers is out. From the doyen Emerson himself:
Smaller suppliers might be earning insufficient returns to warrant new investment in innovation and equipment that would enable them to offer better-quality products at lower prices.
Some might describe this as desirable creative destruction, after economist Joseph Schumpeter, but that refers to the emergence of disruptive, new, productivity-raising technologies that remove poor adopters from the market.
When the supermarket industry tends towards monopsony – where a small number have market buying power over their suppliers, the destruction of those suppliers is not creative.
Of course, this doesn’t mean that every supplier, regardless of how inefficient it might be, deserves a living; they need to compete with each other and with new market entrants to improve their efficiency, innovate and lower their prices.
Yet, they have no hope of doing so if their margins are so low that the best they can hope for is white-knuckled survival.
The ACCC is also conducting an inquiry on the consumer side, so we don’t have the full picture yet.
But, so far, this is only going to raise prices as the duopoly passes on costs.
Prime Minister Anthony Albanese says Craig Emerson’s interim report on major supermarkets recommends a mandatory code of conduct for the sector including “very heavy” penalties for companies found to breach the code.
“This is a very strong interim report though – I’ve got to say so that clearly we are signalling the direction in which Dr Emerson is headed,” Albanese said on ABC News Radio.
“This proposes to replace the current voluntary code of conduct with a mandated system.
“The government wants a fair go for families and a fair go for farmers and I think that’s what Australians want as well.
Actually, Australians want a government that looks after their interests not vested interests:
- regulate the gas cartel to crash energy prices;
- freeze immigration to end the rental shock and housing crisis;
- do a single, authoritative inquiry into structural supermarket reform to ensure a competitive market.
Not this late to the party political and corporate arse-covering for the government’s own inflationary blundering.
Albo needs a mandatory code of conduct to look after Aussies.
