Coles denies abuse of power claims

Coles has rejected claims it has misused market power to drive smaller rivals out of business.

Independent grocery chain, Harris Farm Markets, claims the major chains pay inflated prices or hefty option fees to secure new store sites and are prepared to incur losses in early years, according to a new report in the Australian Financial Review.

But, the supermarket chain has defended its actions arguing it has sacrificed sales of almost $1 billion per the past four years by closing 100 marginally profitable supermarkets and dozens of liquor stores.

The Australian Competition and Consumer watchdog (ACCC) is reportedly following up claims by Harris Farm that Coles and Woolworths are paying above market rates for rent and new sites as part of its investigation into creeping acquisitions by the larger chains.

Wesfarmers finance director, Terry Bowen, told the AFR he firmly denied the claims.

“I categorically dispute that,” Bowen said.

“When we move into a locality, it’s because we expect it to be profitable very early in its life,” he added.

He said Wesfarmers did not generally pay option fees for sites or stores that would not open for a while. ACCC chairman Rod Sims said the watchdog would look into the allegations.

“Harris Farm is a big player…we’ll get in touch with them and look at this,” Sims said.

“If we think there is anti-competitive behaviour there, we will follow it up.

“But there are hurdles to be jumped before we take action, ” he explained.

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