COLES and Woolworths enjoy unprecedented market power but their "copycat" strategies limit their ability to use this power to raise prices and profits, competition experts Graeme Samuel and Stephen King said.
Professor Samuel, the former chairman of the Australian Competition and Consumer Commission, and Professor King, a former ACCC commissioner, said Woolworths and Coles have played a "decade-long game of copycat" that has limited their profits, eroded customer loyalty and restricted customer choice – but led to lower prices for consumers.
"Normally in a concentrated market with high barriers to entry and expansion, major competitors seek to differentiate themselves," they said in an opinion piece in Thursday's The Australian Financial Review.
"Competitors appeal to different customer segments, increasing prices and profits while avoiding a head-to-head fight," they said.
"In contrast, Coles and Woolworths have played a decade-long game of copycat. From 'everyday low prices' to 'fresh food', from 'home brands' to 'discount petrol', where one has gone, the other has rapidly followed."
This copycat strategy not only had ramifications for retailers' profits and consumer prices and choice – it meant suppliers had come under intense pressure from both supermarket chains at the same time.
"And it makes the supermarkets an easy target for political vested interests," the two writers said.
The supermarket chains' power and its impact on suppliers, communities and consumers will be discussed at a supermarket industry symposium in Melbourne on Thursday.
More than 200 industry players, including competition lawyers, academics, supermarket and grocery industry executives and consumer advocates, will attend the symposium, organised by Caron Beaton-Wells, a professor at the University of Melbourne, and Christine Parker, a professor specialising in regulation at Monash University.
Speakers include Professors Samuel and King, Citigroup retail analyst Craig Woolford, Greens senator Peter Whish-Wilson and competition law experts Professor Beaton-Wells, Alexandra Merrett, of Melbourne University, and Rhonda Smith, an economist, lecturer and former ACCC commissioner.
The symposium will examine the commercial strategies being pursued by the big chains relating to acquisitions, private label, diversification, pricing, supply chain management, advertising and packaging.
Professors Samuel and King argue that neither the Australian grocery industry nor the competition law regime are broken.
With the exception of unconscionable conduct provisions, existing competition laws are well able to deal with the supermarkets, they said.
