Jail threat, apologies as supermarket chiefs face probe

Supermarket executives defended their practices, apologised to suppliers and even escaped the threat of jail during a fiery parliamentary hearing on prices at the checkout.

Woolworths chief executive Brad Banducci and Coles boss Leah Weckert fronted up to the Senate inquiry on supermarket prices on Tuesday and both stated the sector remained competitive despite the size of their duopoly.

Mr Banducci was threatened with the possibility of six months in jail or a $5000 fine for holding the Senate in contempt after repeatedly failing to answer a somewhat pointy-headed question about Woolworths' profitability.

The supermarket boss was asked to disclose Woolworths' return on equity, a measure of corporate profitability that generally indicates how efficiently profits are generated.

Brad Banducci
CEO Brad Banducci dodged questions on disclosing Woolworths' return on equity.

Instead, the chief executive told the committee Woolworths focuses on return on investment and total shareholder return measures, not return on equity.

"We measure return on investment, which we think is the right way of measuring profitability in a company," he said.

Inquiry chair and Greens senator Nick McKim warned Mr Banducci a failure to answer the question directly could lead to him being held in contempt by the Senate.

Such a charge comes with a fine of up to $5000 and a possible prison sentence of six months.

The failure to disclose the answer led to the inquiry being forced to suspend its hearing for several minutes.

While the chief executive avoided being held in contempt, Mr Banducci couldn't provide the full number, saying he would take the question on notice.

"I don't focus on it, it's not the numbers that drive our industry. The way our industry should be assessed is the total return on investment and total shareholder return," he said.

Greens senator Nick McKim
Senator Nick McKim accused Mr Banducci of cherrypicking data regarding Woolworths' profits.

"If it helps the committee in terms of us moving on, I don't know that number."

The profit margins of major supermarkets have come under scrutiny at the inquiry, with Woolworths and Coles accused of price gouging.

Senator McKim accused Mr Banducci of cherrypicking data surrounding the supermarket's profits.

"Honestly, I'm not interested in your spin or your bulls***. This is a Senate inquiry. Answer the question," he said.

"You've used this market dominance to put the squeeze on your suppliers, including farmers, to force down wages, to compromise staff safety and to price gouge your customers."

While Coles and Woolworths make up almost two-thirds of Australia's grocery sector, both executives said the industry was still competitive, due to the arrival of other major players such as Aldi, Costco and Amazon.

Mr Banducci had earlier denied Woolworths was price gouging at the checkout.

"I would respectfully submit that this is an incredibly competitive market and that is good for consumers."

Coles chief executive Leah Weckert
CEO Leah Weckert concedes Coles needs to improve its relationships with suppliers.

Ms Weckert said Coles welcomed further competition, while also admitting the supermarket had let down suppliers, following claims the company was underpricing the wholesale value of goods.

It comes following previous allegations at the inquiry supermarket giants were paying prices for goods to primary producers well below market value.

"Claims have been made about how we interact with our suppliers, we acknowledge that we don't always get it right, but all of our procedures seek to ensure fair and sustainable relationships," she said.

"We acknowledge some of the concerns that have been raised by the farming sector, particularly the horticultural sector, around price transparency."

Ms Weckert said the supermarket could do a better job on its pricing and discounts.

"We have, in good faith, worked with suppliers to make sure they are getting paid fairly and in a large number of cases that has flowed on to higher prices for customers," she said.

"There is no bad intent there, but we definitely could execute against it better, and we are working towards holding ourselves to a higher level of account on that."

A review into the voluntary food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, recommended it be made mandatory, with significant financial penalties for breaches.

License this article

What is AAPNews?

For the first time, Australian Associated Press is delivering news straight to the consumer.

No ads. No spin. News straight-up.

Not only do you get to enjoy high-quality news delivered straight to your desktop or device, you do so in the knowledge you are supporting media diversity in Australia.

AAP Is Australia’s only independent newswire service, free from political and commercial influence, producing fact-based public interest journalism across a range of topics including politics, courts, sport, finance and entertainment.

What is AAPNews?
The Morning Wire

Wake up to AAPNews’ morning news bulletin delivered straight to your inbox or mobile device, bringing you up to speed with all that has happened overnight at home and abroad, as well as setting you up what the day has in store.

AAPNews Morning Wire
AAPNews Breaking News
Breaking News

Be the first to know when major breaking news happens.


Notifications will be sent to your device whenever a big story breaks, ensuring you are never in the dark when the talking points happen.

Focused Content

Enjoy the best of AAP’s specialised Topics in Focus. AAP has reporters dedicated to bringing you hard news and feature content across a range of specialised topics including Environment, Agriculture, Future Economies, Arts and Refugee Issues.

AAPNews Focussed Content
Subscription Plans

Choose the plan that best fits your needs. AAPNews offers two basic subscriptions, all billed monthly.

Once you sign up, you will have seven days to test out the service before being billed.

AAPNews Full Access Plan
Full Access
AU$10
  • Enjoy all that AAPNews has to offer
  • Access to breaking news notifications and bulletins
  • Includes access to all AAPNews’ specialised topics
Join Now
AAPNews Student Access Plan
Student Access
AU$5
  • Gain access via a verified student email account
  • Enjoy all the benefits of the ‘Full Access’ plan at a reduced rate
  • Subscription renews each month
Join Now
AAPNews Annual Access Plan
Annual Access
AU$99
  • All the benefits of the 'Full Access' subscription at a discounted rate
  • Subscription automatically renews after 12 months
Join Now

AAPNews also offers enterprise deals for businesses so you can provide an AAPNews account for your team, organisation or customers. Click here to contact AAP to sign-up your business today.

SEVEN DAYS FREE
Download the app
Download AAPNews on the App StoreDownload AAPNews on the Google Play Store