By Byron Kaye
SYDNEY (Reuters) - Australia's antitrust regulator should be given powers to break up supermarket giants Woolworths and Coles to improve competition as fruit and vegetable farmers have not seen prices rise for 15 years, a Senate inquiry heard on Thursday.
The National Farmers Federation Horticulture Council, which represents fruit and vegetable growers, said the country's farmers and consumers were "held to ransom by a large corporate duopoly" which could easily divest assets if required, weakening their hold on wholesale and retail prices.
"The ability to divest, from a government policy point of view, should never be taken off the table," said Council member Jeremy Griffith at the inquiry, which began hearings on Thursday.
"From a competition point of view, in five years time, we could be in a lot more competitive position than we're in now."
Two years of high inflation have swung the spotlight on Woolworths and Coles which together ring up about two-thirds of Australian grocery sales in one of the world's most concentrated markets. Six separate inquiries into their operations have been announced this year.
The centre-left Labor government has not said what changes it is considering but it has so far rejected calls for a compulsory breakup of the grocery giants from rural-focused opposition party the Nationals.
Representatives for Woolworths and Coles were not immediately available for comment.
The companies said in written submissions to the inquiry that Australia's grocery sector was highly competitive with some of the lowest profit margins in the world. They named newer entrants like ALDI as adding to competitive pressures.
Griffith said that if the federal government doesn't enable the Australian Competition and Consumer Commission to force asset divestment, it should give the regulator power to obtain historic price data to determine whether their practices are fair.
The government should also consider making a voluntary grocery code of conduct mandatory, he added.
Fruit and vegetable growers typically sell to supermarkets on weekly contracts and accept uneconomic offers for their produce because of concerns about missing out on future sales due to the limited number of supermarkets. That had resulted in growing numbers of farmers saying they wanted to quit the industry, Griffith said.
"Every grower in this country feels they have no choice but to accept the price that is put on the table," he said.
"It's a very tilted playing field."
The CEOs of Woolworths and Coles are expected to give evidence at the inquiry which is due to deliver a final report by May 7.
(This story has been refiled to remove a repeated word in paragraph 1)