I have posted about the oligopolistic Australian retail industry before, so Liz Knight's column in The Sydney Morning Herald yesterday was of interest. She tells of a high-powered meeting of senior Australian retail figures in Sydney earlier this week – a meeting that calls to mind that dictum from Adam Smith about being suspicious when people "of the same trade meet."
At lunchtime last Monday the 20 most powerful men and women in Australian retailing held a secret meeting at the exclusive Royal Sydney Yacht Squadron clubhouse at Kirribilli on Sydney's North Shore. The invitation had been issued by the two industry big boys: the chief executive of Woolworths, Roger Corbett, and the head of Coles Myer, John Fletcher.
For many, it was the first time they had been in the same room as the two men, who have long been not just arch rivals but arch enemies.
The pair had decided to get all the major retail chief executives together, from David Jones's Mark McInnes to Mike West from Best & Less, to join in a common mission.
A couple of ideas were tossed around. The first was a united front on regulatory issues. So Graeme Samuel over at the Australian Competition and Consumer Commission may take a keen interest in what the retailers are up to.
Now as the guys at Crikey remind us, here's what economist Adam Smith wrote about these sorts of get together's more than two centuries ago:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.
Between this group, they own the grocery and apparel market, and strangling what competition is left in the petrol market and have the pharmacy game next in their sites. Remembering also that both Woolies and Coles were last in the Federal Court together on charges from the Australian Consumer & Competition Commission over restricting competition in the liquor industry, consumers and smaller retailers have every right to be concerned.