Market power of retailers like Ikea, Bunnings and Petstock being scrutinised by Senate inquiry

ABC NEWS (Australia)

The growing power of "big box" retailers including Bunnings, Petstock, and Ikea is about to be scrutinised by the Senate. The significant market power of large format retailers is the subject of a new inquiry.

Transcript

00:00A few decades ago if you have a dog or a cat and you wanted to buy some toys for them or

00:07some dried food, you might head on down to a small retail store.

00:12Today pet retail is dominated by two major players.

00:16You have pet stock which is owned by Woolworths partially and you have Pet Barn which is owned

00:22by a US equity fund.

00:25Now small pet retailers that are still in the market and lots of them have been gobbled

00:30up by these big players.

00:32The small ones remaining say that they're finding it really hard to compete with these

00:37big companies on things like price or their loyalty programs.

00:41And it's not just pet retail where you've had massive companies come significantly into

00:45the market.

00:47We have hardware for instance now dominated by major player Bunnings as well as its rival

00:55Mitre 10 which is owned by Metcash.

00:59So the Senate inquiry's terms of reference make it clear that they are looking at retailers

01:03like Bunnings and other large format stores that could rope in all sorts of names such

01:08as Ikea which has already made a submission or Dan Murphy's which has also supplied one.

01:14In terms of what this inquiry will achieve we know that the retail bosses will have to

01:19be forced to front it and that could continue to damage their brands.

01:24In terms of deliverables we have already had the Federal Government rule out divestiture

01:29powers that could split up companies that have gotten too powerful.

01:34We already have the Feds talking about bringing in increased powers for the ACCC when it comes

01:39to stopping mergers.

01:41In fact just this morning we've had the Federal Treasurer and the ACCC speak about these looming

01:47new powers.

01:48Here is the ACCC speaking.

01:50Pet stock amassed the second largest chain of pet products across Australia with no notification

01:58whatsoever to the ACCC.

02:00We saw it when a large listed company, Woolworths, notified it to take a shareholding in it.

02:07In order to proceed with that transaction we required divestitures in 40 communities

02:14across Australia to return competition and lower price.

02:18That's an example but we have examples in cancer radiology, pathology, supermarket acquisitions,

02:25petrol station acquisitions, liquor store acquisitions.

02:29That's the ACCC talking about some new powers that they're expecting in terms of merger

02:34laws and certainly there'll be more focus here on major sectors that have accumulated

02:40too much market power.

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