What does the competition watchdog's latest win against Coles and the free-trade agreement (FTA) have in common? They mark a change in the playing field that...

Brendon Lau

Vantage Point Partners

What does the competition watchdog's latest win against Coles and the free-trade agreement (FTA) have in common? They mark a change in the playing field that has made Australia's two supermarkets superpowers of their industry. Wesfarmer's-owned Coles and Woolworths have shared such a powerful duopoly that they effectively could get away with just about anything. The latest agreement by Coles to pay $10 million in fines for alleged bullying of 200-odd suppliers gives a tiny glimpse of the strong-arm tactics employed. The fine may not sound much but is one of the bigger fines levied against a single entity by the ACCC in recent memory. It's only dwarfed by Qantas' $20million fine and the $36million slap on Visy in November 2007. The case against Coles could put an end to trade spend (suppliers having to pay for discounts and promotions on their product being run by the supermarkets). This practice is one of the key drivers behind the supermarkets rising margins and superior ROE. Woolworths' generated ROE of 26% on average over last five-years, which would make CBA green with envy. Click for more (VIEW LINK)


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Brendon Lau
Associate Director - Investor Relations
Vantage Point Partners

I am with Australia's leading small caps investor relations and media relations firm, Media & Capital Partners. I worked as a small caps analyst and journalist prior to MC Partners. Views are my own and should not be regarded as advice or...

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