Supermarket giants facing further scrutiny over ‘land banking’ allegations

ABC NEWS (Australia)

Australia's supermarket giants are facing further scrutiny by the competition watchdog -- over claims they are holding onto dozens of blocks of land to prevent other supermarkets from setting up shop. The practice is known as "land banking".

Transcript

00:00Land banking describes the practice where the supermarket giants are allegedly buying

00:06up several blocks of land right around the country with loose plans to develop those

00:12sites into supermarkets. But it might take years for that to happen. And the reason it's

00:18been a controversial practice is because the practice of them doing that actually means

00:23that them buying up that land means they're keeping competitors out. It means other supermarket

00:28giants who might want to come into town and set up a supermarket there to compete are

00:32unable to do so because the land there is limited. And so that's got the attention of

00:37the ACCC and their supermarket inquiry, which they are still in the process of doing. We

00:42had their interim report released last month. And in that report, the ACCC specifically

00:48called out the number of claims that have been made about the supermarket giants, specifically

00:52Coles and Woolworths holding onto dozens of sites and doing this practice that is

00:58known as land banking. All up, they identified around 165 sites that are being held by either

01:05Coles, Woolworths or Aldi. Aldi has 13 sites. Coles has 42. But Woolworths by far holds

01:12the most of these sites at 110. So that's really got the interest of the ACCC because

01:19they're looking at the fact that we might have quite an anti-competitive supermarket

01:24industry. And that is part of the reason why we're seeing higher prices at the supermarket.

01:28So the ACCC is having a closer look at that before it delivers its final report in February.

01:33But specifically when it comes to the sites that the supermarket giants are holding onto,

01:40one of them is in the Northern Rivers town of Mewillumbah, which is in Northern New South

01:44Wales. And there's a site there that Woolworths has been interested in trying to set up a

01:48supermarket on this particular block of land that's about three to four acres in size since

01:532014. And I went and visited the site last week and there is still no supermarket in

01:59sight and it's quite a contentious issue. Now, we heard from both the supermarkets as

02:04well at the end of last week. They were both at the Senate inquiry into the cost of living

02:09and both Coles and Woolworths denied that they are engaging in this practice of land

02:14banking. But it is something that the ACCC is taking a closer look at and we can expect

02:18to hear more about this in the coming months. I also spoke to the ACCC's former boss,

02:23Graham Samuel. He was in charge when they did their last supermarket inquiry back in

02:282008. And he says that he has been quite shocked to see that its provision of land banking

02:34has grown quite substantially since he was running the ACCC. Take a listen.

02:40What we've now got is several hundred land acquisitions that have been made by the major

02:45supermarket chains, particularly in regional centres, that are preventing or inhibiting

02:51at least the presence of groups like Aldi, Costco and others to enter into those markets

02:58and to provide a competitive pricing offer to consumers. Now, that's not right.

03:03It gets a little bit more complicated because it also is part of local planning and zoning

03:08laws and that's ultimately the responsibility of local governments around the country and

03:13that's ultimately determined by state governments. And that's certainly the case in Mewillumba

03:18where Woolworths have been holding onto this block of land for about 10 years now. And

03:24so that's also something that the ACCC identified in its last grocery inquiry in 2008 when Graham

03:30Samuel was the chair and called out the fact that holding onto these blocks of land and

03:35these planning and zoning laws can really actually stop competitors from coming in because

03:42it is just such a complicated process and it really varies from state to state. Now,

03:47that is also something the ACCC is looking at in its current supermarket inquiry with

03:52its final report to be coming out in February next year. But right now, the Federal Treasurer

03:58Jim Chalmers is also having discussions about this very issue with zoning and planning reforms

04:03with his state and territory counterparts because it is one of those issues that does

04:08complicate the potential building of supermarkets and it's something that the supermarket giants

04:12say that they can't do anything with the land unless they're given the green light

04:16from the councillors to build on. So there is a real complicated picture here. It's not

04:22as simple as supermarkets buying land and starting to build. They do need that permission

04:25and so we can expect more of these conversations to be hearing over the next couple of months

04:31before the ACCC delivers its final report at the start of next year.

Category

Transcript

Recommended