Coles, Woolies to shelve duopoly | Northern Rivers Money, Business and Property | Business News for Northern Rivers, Australia

AAP

SUPERMARKET giants Coles and Woolworths have agreed to end a practice which barred smaller grocery chains from opening in the same shopping centre.

The retail titans have promised the Australian Competition and Consumer Commission (ACCC) they will no longer insert restrictive provisions in supermarket leases.

Eighty per cent of existing shopping centre deals favouring Coles and Woolworths will be abolished from Friday.

But the government and the competition regulator have failed to explain why the remaining 20 per cent of lease deals - which potentially breach the Trade Practices Act - will continue for another five years.

The move to end anti-competitive practices is expected to open up shopping centre space to Aldi, Franklins, Foodworks and IGA stores.

ACCC chairman Graeme Samuel said the voluntary undertaking by Coles and Woolworths was a "major breakthrough" for grocery competition.

"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," he said.

Competition Policy and Consumer Affairs Minister Craig Emerson said 80 per cent of the 750 existing leases favouring the supermarket duopoly would cease immediately.

The remaining 148 leases will be phased out over five years, with no restrictive provisions allowed in new stores.

"Barriers to entry in shopping centres that have restricted competition for so long to the detriment of consumers are being torn down," Dr Emerson said.

But University of New South Wales competition law expert Associate Professor Frank Zumbo said the remaining 20 per cent of anti-competitive shopping centre arrangements were a possible breach of the Trade Practices Act.

Associate Prof Zumbo said shopping centre landlords were not obliged to make space available for smaller grocery chains under the new arrangements.

"It's one thing to remove lease restrictions, it's another matter for competitors to get space in shopping centres to be able to compete in the centre with Coles and Woolworths," he said.

Woolworths said it was responsibly addressing the ACCC's wish to make the sector more competitive.

Coles managing director Ian McLeod said the agreement with the competition regulator was a "commonsense" approach.

Consumer group Choice said the agreement would have long-term benefits, but he questioned what shopping centre operators like Westfield and Stockland had agreed to give up.

"This is not the single, magic panacea that will cure everything," Choice spokesman Christopher Zinn told AAP.

Australian Retailers Association executive director Russell Zimmerman, who represents smaller and medium stores, said the end to anti-competitive leasing arrangements would give consumers greater choice.

Coles and Woolworths command about 55 to 60 per cent of Australia's grocery market, operating 750 and 800 stores respectively.

The two supermarkets sell 70 per cent of dry, packaged groceries in Australia.

IGA owns 1,200 stores, a bigger number than either Coles or Woolworths.

The German-based Aldi chain, which entered the Australian market in 2001, plans to grow from an existing base of 200 stores to 700.

The ACCC announcement overshadowed a Senate committee hearing into why the federal government dumped its election promise to introduce a grocery choice website.