Panic-mode off as ACCC grants authorisation for supermarkets to join forces
On 23 March 2020 the ACCC granted urgent interim authorisation to supermarkets, allowing them to collaborate in the wake of demand issues for essential products spurred by COVID-19.
It’s no secret that uncertainty associated with COVID-19 has spurred panic buying of everyday items across Australia, with toilet paper arguably the most sought-after commodity of 2020. Analysts have estimated that food and grocery sales have risen at least 25% in recent weeks due to stockpiling, placing huge strains on supermarket supply chains (including through online orders).
In response to this unprecedented demand, supermarkets have been given permission by the ACCC to join forces in addressing fair and equitable access to essential grocery and household items for consumers.
Coles, Woolworths, ALDI and Metcash, lodged an application with the Commission last Friday for both urgent interim and final authorisation to coordinate activities for retail products (defined as fresh food, groceries, household products and liquor).
While it decides on the final authorisation, the ACCC has granted the supermarkets’ urgent interim authorisation request. Going forward, Coles, Woolworths, ALDI and Metcash, and any other grocery retailer wishing to participate, can enter into agreements with each other to:
- facilitate the purchase and supply of retail products;
- ensure fairer access to retail products for the general public;
- provide greater access to retail products for those in need (e.g. the elderly and disadvantaged); and
- facilitate access to retail products in remote and rural areas.
The authorisation also covers agreements with manufacturers, suppliers and transport and logistic suppliers made for these reasons, and agreements made on recommendation of the Supermarket Taskforce (convened by the Department of Home Affairs). Importantly, supermarkets are not permitted to agree on retail prices for products.
The authorisation provides the participating supermarkets statutory protection from legal action for this conduct, which might have otherwise been a breach of competition provisions (e.g. cartel laws) under the Competition and Consumer Act 2010 (Cth). The ACCC grants authorisation if it considers the public benefit outweighs public detriment (including from any lessening of competition).
In the coming days, the ACCC will commence a public consultation process for its decision to grant urgent interim authorisation and final authorisation. If final authorisation is granted, it will apply for a period of six months.
Unilateral measures taken by supermarkets, including rationing purchases, had not sufficiently curbed demand issues, leading to the authorisation request. The Commission may see a spike in COVID-19 related authorisation requests, as the pandemic’s impact on essential services industries continues to unfold. For example, on 20 March 2020, the ACCC granted urgent interim authorisation to the Australian Banking Association and banks to work together in implementing a small business relief package, and on 24 March 2020 interim authorisation was granted to the Medical Technology Association of Australia to enable businesses in the medical technology industry to implement a coordinated strategy in relation to the supply of medical equipment and supplies in response to the COVID-19 pandemic.