Federal industry minister Kim Carr has lashed out at supermarket giants Coles and Woolworths for abusing market power.

Speaking at the Australian Food and Grocery industry leaders’ forum, Carr highlighted that the power of major retailers are impacting on the competitiveness of food and grocery manufacturers.

“I am particularly concerned about the market dominance of the two major supermarket chains – who now control 80 per cent of retail food sales in this country,” he said.

“We are determined to address the complaints brought to us by many local [manufacturing] firms … there is a case to be concerned about an abuse of market power.”

According to Carr, both supermarket chains are auctioning off shelf-space with a view to excluding competitors; extracting concessions contract negotiations by denying access to shelves; deducting costs for stock handling services; forcing manufacturers to pay freight charges between warehouses and stores; rescinding contracts mid-term; and using their home-brands to destroy the intellectual property of suppliers.

“For most food manufacturers, their main access to customers is through the supermarket chains. In practical terms, you deal with Coles and Woolworths, or you go out of business,” he said.

“There is just not enough business in the independent channels to sustain product lines.”

These comments were welcomed by the AFGC, following the release of its 2020: Industry at a Crossroads report, which forecasted that the retail market is expected to remain highly concentrated over the next 10 years with private label products expected to grow strongly.

AFGC chief executive Kate Carnell said it was very encouraging to see the Federal Government recognising that there was a real problem with retail concentration and market dominance in Australia, which needs to be urgently addressed.

“It fantastic to see Minister Carr and the Federal Government showing leadership on this issue and looking for ways of creating a level playing field in Australia’s retail market,” she said.