ACCC toasts Breville; Won’t Touch Big Boys
ACCC toasts Breville; Won’t Touch Big Boys
ACCC chairman Graeme Samuel flexed his muscles today, announcing that the ACCC will oppose the acquisition of Breville Group by GUD. Apparently, ‘If GUD Holdings was to acquire Breville Group, there would be a reduction in this competitive tension that could result in higher prices for consumers as well as a reduction in the head-to-head competition between these two companies on product range, promotions and innovation’. He might be right, but it still seems bizarre.
We have the most concentrated and – consequently – profitable banking industry in the world. Yet the ACCC waved through the acquisition of St George by Westpac and BankWest by CBA, and left consumers with even less choice. We have two giant players in the grocery market - Woolworths and Coles - and the ACCC let them buy petrol stations. To this day, it still lets them continue with fuel dockets that are an obvious price subsidy. No independent petrol station can possibly compete and people like me, who don’t use fuel, have to pay for it in the price of our groceries.
Yet big Graeme is out there making sure we don’t pay too much for sandwich makers. Nice job boys, we appreciate it.
Custom Search 2
Comments
Hi Steve,
I can understand your point, and certainly agree with you about the banks and Coles & Woolies. My guess is that the ACCC knocked back the bid because one company (GUD) would control more than 90% of the products in some categories. That's a monopoly, and to the ACCC, worse than a duopoly (i.e. Coles & Woolies).
Cheers
Mike
A further comment. I guess the issue really is that everyone except the ACCC knows the big banks and Coles & Woolies control their respective markets. Does it really matter if there are 4, 2 or 1 of them, and what level of "collusion" goes on?
We face a similar problem in our industry but wouldn't bother wasting my breath with the ACCC because they wont do anything. In our industry environmental consulting we require NATA accredited laboratories for a wide range of analytical tests. When I started 12 years ago there were about 8 labs who could offer a wide range of tests that were NATA accredited. Now there are just 2 large companies and one small company, due to consolidation. The large companies are the most expensive (apparently economies of scale don't apply for the 2 high fixed cost businesses ie their costs of equipment and people is high but testing prices should be low as their consolidation increases and more volume is secured) Our problem lies in the fact that we require a primary lab and a secondary lab for check testing, so we get good rates from the small lab and high rates from the check lab as there is no-one else around and they know it. When the small lab is eventually swallowed prices will sky rocket. Campbell Brothers the largest service provider via ALS may be worth a review based on this. Note however I think ALS have always been the worst in the industry due to their cost and complete lack of customer service.
Steve,
I think there's an argument that even if GUD did control a large part of the market, they wouldn't be able to exercise an enormous degree of power due to the fact that so many of their sales would be to the Coles/Woolworths retail duopoly, who would simply shut GUD out if they tried to "get heavy"
We live in a small country town where there are two chemist shops. Both shops were bought by one owner. Because of the federal government imposed restrictions on opening new chemist shops (no new chemist shops within 1.5Km of existing Chemist shops), we now have a monopoly in our town. The ACCC is not interested.
That doesn't sound right at all Harry. These appliances aren't really sold through Woolies or Coles that much (except a few through Target, Big W, KMart). I would say that Harvey Normal, Clive Peters, Myer, David Jones, Good Guys and the other 20 or so electrical and white goods outlets would sell far more than Coles and Woolies.
Post new comment