Retails welcome ACCC crack down on supermarket leasing

Retail organisations have welcomed an agreement between Coles, Woolworths and the consumer watchdog which will see restrictive provisions in supermarket leasing agreements phased out.

The agreement from the supermarket giants is in response to a 2008 inquiry which found that hundreds of supermarket tenancy agreements included terms that would prevent shopping centre managers from leasing space to competitors.

Australian Retailers Association executive director Russell Zimmerman has congratulated Coles and Woolworths in a statement for their “co-operative negotiation” that will see the end of anti-competitive leasing arrangements.

“An open retail market free from restrictive and anti-competitive leasing arrangements provides greater choice for consumers in regards to product and price in one location,” he said.

“The announcement allows new entrants to Australia’s supermarket and grocery sector, including ALDI, to take out leases in shopping centres where they have previously been excluded.”

But Zimmerman also called for more action, saying it is now up to the Government to take further steps in ensuring competitive terms are maintained for other retailers.

“The ARA now calls on the Rudd Government, COAG and the ACCC to support harmonised lease legislation across all states to allow equal and fair access to shop space on competitive terms for all retailers,” Zimmerman said.

Australian National Retailers Association chief executive Margy Osmond also praised the ACCC’s move, saying it is “further evidence that the large retailers are interested in fair and healthy competition”.

ACCC chairman Graeme Samuel says that over 700 supermarket leases were identified through the ACCC investigation as potentially restrictive.

“This agreement addresses all those existing leases involving Coles and Woolworths, as well as dealing with all future arrangements,” he said in a statement.

“This is a major breakthrough for grocery competition in Australia. Reducing the barriers to entry for new and expanding players opens the possibility for Australian consumers to have greater choices in where to shop, and potentially pay lower prices as a result.”

Samuel also said the ACCC will be working with other supermarket retailers in order to bring them under the same types of protection.

“The ACCC will now enter into discussions with a view to them adopting the same approach in their leases. We will also be talking to shopping centre landlords to ensure a smooth transition.”