Saturday, 8 June 2013

When " Big " is " Too Big " !

The ACCC has just knocked back Woolworths from opening a new store at Glenmore Ridge, near Penrith.   It has stores completely dominating the surrounding suburban areas and  this new store would simply confer near monopoly status. 

The battle of supremacy between Woolworths and Coles is seeing the duopoly extend it's reach far beyond groceries.   Independent petrol stations are doing it tough with the big end of town using their sales dockets as discount vouchers for petrol sales.  Now hardware is in their sights.   Coles has an edge with it's Bunnings chain and Woolworths is fast building a rival network that will make life very difficult for the independent suburban hardware stores.

Television advertising reveals that Coles has entered the insurance field and is seeking a share of car insurance.  The entire insurance spectrum is highly competitive and is fighting a price war.   " Cheaper " seems to be the catch-cry when it comes to premiums, but " Buyer Beware " is lurking in the small print.

Every time we have a major rain event a lot of very unhappy policy holders find that the fine print in their policy defines any sort of water damage as a " flood " - and excludes this from the cover offered.    There have been several attempts to banish legal " Gobbledegook " from the exclusions and definitions, but the disappointment goes on and on - year after year.

Car insurance also has it's hazards.   Some insurance companies allow a choice of repairers, but others demand the repair be done by their choice of provider, and some jobs are done to a price rather than a standard.   Then there is the time factor, length of guarantee - and whether the customer is entitled to a courtesy car while work is carried out.   The lowest price may not deliver the better deal.

Whenever a company achieves market share that is out of kilter with it's competitors, the buying public tends to suffer.   Not only does a giant firm become unwieldy in the management areas, but the temptation to use it's power to dictate prices is almost overwhelming.     Many years ago such an impending monopoly was brewing in the pharmaceutical field, and the government stepped in and placed a legal limit on the number of stores they could own.    That is the reason we have a vast number of independent chemist shops scattered throughout Australian cities today.

The fact that Coles and Woolworths are a duopoly may have stayed the government's hand from a similar action, but the best interests of the buying public will be served by having a wider choice than just two giant competing chains.

Perhaps now is the time to limit the intrusion into wide spectrum expansion into other fields which must displace lesser competitors and eventually produce monopolies too great for any sort of control.

There must come a point - where "Big " has crossed a line into " Too Big " !


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