Suppliers have been reluctant to back up claims of bullying with evidence. Photo: Tamara Voninski
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Woolworths chief executive Grant O'Brien kept to a very tightly-worded script when asked about the Australian Competition and Consumer Commission's probe into claims that the big supermarket groups have been bullying suppliers.
Woolies had a strong track record in running a business that was "fully compliant," he said, adding that it had a "suitably qualified and accredited" team. The focus was, is and would be on running a successful business, he said, one that both boosted returns for its shareholders and delivered a better shopping experience for its customers. Falling grocery prices and steadily increasing customer numbers in Woolies supermarket were evidence that the group was succeeding, he suggested.
There's no doubt however that behind the scenes Woolies and its big competitor, Coles, will be looking hard to see if claims that buyers have bullied suppliers are correct.
The supermarkets are powerful, and suppliers have been reluctant in the past to back up anecdotal claims of bullying with evidence, not of the exercise of their considerable power, but the illegal deployment of it.
ACCC Rod Sims broke through that barrier last year when he said any supplier that came forward with information could do so in confidence. He heard enough to upgrade the probe into a formal investigation where suppliers can be called to give information that could be used as evidence.
But there is a lot of water to flow under the bridge with the ACCC investigation. Both groups have policies and guidelines that require buyers to deal fairly with suppliers. But as Wesfarmers chief executive Richard Goyder pointed out at a business conference this week, at groups as large as Wesfarmers and Coles, the odds are that someone on their staff has ignored those policies at some stage.
Goyder had previously confirmed that his group was running its own internal investigation. O'Brien's comment when he handed down Woolies' 5.5 per cent higher $1.25 billion first half profit was that Woolies always cooperated with the ACCC.
Like Goyder, O'Brien will know that a thorough stocktake of buyer behaviour may turn up something.
Goyder's point is a key one, however. Finding anti-competitive behaviour inside either of the groups doesn't mean that the ACCC will also find that the two big supermarket groups have been systematically mugging their suppliers.
The discovery of rogue operators would raise questions about their internal oversight, but it's another step for the ACCC to conclude that the companies themselves deliberately broke the rules.