It recommends intervention through a mandatory code where a supermarket abuses its superior market power in dealings with smaller suppliers, while providing options for the parties to resolve disputes through agreed mediation and arbitration.Driving the review is the basic principle that competition is good, and more competition is better. It’s as old as Adam Smith, who turned 300 last year.
A threshold question arises from the two inquiries under way: if government intervention results in suppliers getting a better deal from supermarkets, won’t that result in higher prices for shoppers?in a concentrated industry have much greater market power than their smaller suppliers, they will be capable of denying suppliers the opportunity of achieving even a normal profit to sustain their ongoing viability.
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. Suppliers’ fear of retribution would be mitigated by creating a channel for them to make confidential complaints directly to the ACCC. That information would be used in the ACCC forming preliminary views about systemic, anti-competitive behaviour of the relevant supermarket.