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The long-standing battle between Australia's independent grocers and supermarket giants Woolworths and Coles took another turn at a recent public hearing. The Melbourne grocery inquiry involved the Australian Competition and Consumer Commission (ACCC) which questioned whether the supplier of packaged goods for most independent grocers may be helping push up grocery prices.

Together Woolworths and Coles account for around 80% of the country's food retail sector. The companies have been accused of avoiding competition with each other, of blocking new entrants to the industry through property agreements and of forcing smaller suppliers out of business. In 1999 a parliamentary inquiry into food retailing concluded that it was "heavily concentrated and oligopolistic in nature" but the market share of the two supermarkets has continued to expand.

ACCC Chairman Graeme Samuel said at the hearing that he was at a loss to determine if there was competitive pressure on the two major supermarket chains, a recent report in the Australian newspaper The Age stated.

He also said pressure was certainly not coming from smallershops, who matched, rather than competed with, prices at Coles and Woolworths (which operates as Safeway in Victoria.)

"If you look at the lines on the (prices) chart between Coles and Woolworths, they're so close together it's barely discernible…" Samuel told the inquiry.

"I'm at a loss to try and find where the competitive edge is coming from. It's certainly not coming from the independent sector, because the independent sector says we are really matching, on everyday items, the price of Coles and Woolworths."

Samuel said evidence at a previous hearing suggested part of the reason independent retailers were matching prices was because they did not make much profit from packaged goods supplied by Metcash - the main supplier for independent IGA stores. Instead they made profits from other groceries, including fresh food.

*National Association of Retail Grocers of Australia * According to The Age, John Cummings, the Head of the National Association of Retail Grocers of Australia (NARGA), which represents about 4500 independent grocery retailers, lashed out at the suggestion the independent supermarkets were not competitive because of small margins on packaged goods.

He said Coles and Woolworths did not make much of a profit from the sale of dry good groceries either.

Metcash Chief Executive Andrew Reitzer complained that the ACCC was not doing its job right saying that "because they haven't implemented the competition laws strictly and in the strongest possible ways, we now have one of the most concentrated markets in the world where Woolworths and Coles have 76% ."

At the last public hearing (2 June), Reitzer agreed the independent retailers aimed to match the prices of the major chains but said there was competition in the form of promotions, which average 40% of sales.

It was also revealed that NARGA is partly funded by Metcash, but Cummings said they were independent of Metcash in their opinions.

The Australian Competition and Consumer Commission is currently undertaking a study of grocery prices in the country. The report is scheduled to be published in July.