Major Australian supermarket chains are alleged to have bought properties in order to "turf out" independent retailers.

goods on shelf

The leader of Metcash's food division, which oversees the IGA and Foodland brands, has charged big-box retailers with paying exorbitant prices to acquire rivals and buying properties to "turf out" independently owned stores when their leases expire. The CEO of Metcash Food, Grant Ramage, testified before a Senate committee on Thursday that the actions reduced the number of independent stores in the network by eliminating profitable companies.

“That removes critical scale from our network and they’re often prepared to pay significantly inflated prices, far more than any other independent would ever afford to pay,” Ramage said on Thursday.

“If they can’t buy the store, they try and buy the property. We have good examples where they then turf out the independent at the end of the lease even when they already have multiple stores in that locality.”

In response to the land banking claims made earlier today in the supermarket prices enquiry, Woolworths has also provided a response.

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A Woolworths representative states in a statement that the company's developments are in keeping with population growth, as "our customers would expect".

"Our customers would expect us to build new stores, distribution centres and other facilities with the number of new stores in recent years mirroring population growth.

"Most of our developments in the past five years have been in greenfield areas, including growth corridors, and around a third have been in urban areas that are densifying.

"Our focus is on our business — strengthening our network of stores and better servicing communities — not on the business or plans of our competitors."

The investigation was prompted by a recommendation to make the voluntary food and grocery code mandatory for supermarkets in an interim review of the code. The code focuses on expectations for behaviour between supermarkets and suppliers, and the review suggests stiffer sanctions for businesses that break the guidelines.

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