Are Australian supermarkets the "bad boys" of the economy‪?‬ Fresh Economic Thinking

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Right now there is a Senate Inquiry into supermarket prices as well as a much more extensive and detailed inquiry by the Australian Competition and Consumer Commission (ACCC).
Supermarkets aren’t my highest priority in terms of the cost to consumers from their conduct (superannuation is far more costly - see here and here). But supermarkets nevertheless comprise a large share of household budgets and directly affect choices in our daily lives.
One dimension of supermarket competition revolves around location choices. Rules around these choices usually involve town planning regulations that seek to cluster retail activities in a hierarchy of locations.
This article is about how town planning rules are used as the basis for often frivolous anti-competitive legal cases, with some detail on a recent case in Brisbane.
But the bigger puzzle is this: Why have supermarkets for so long behaved so anti-competitively compared to other retailers or commercial and industrial businesses?
It might simply be the case that when there are few ways to innovate your product, you innovate on other regulatory margins to outcompete your rivals (see last week’s FET #29 podcast about the electricity pseudo-market).
What else is a supermarket to do to make more money?
A history of taming supermarket behaviour
Look at what has already come out of the initial testimony to the current Senate Inquiry on the topic of preventing competition through location choices.
The questions being put to Metcash CEO Grant Ramage during his session were mostly about land banking by Coles and Woolworths.
In the context of the supermarkets, land banking is a strategy  where they buy up large areas of land across the country even if they don't have plans (or permission) to build a store there, therefore reducing competition.
Mr Ramage was asked about this behaviour by Coles and Woolworths throughout his appearance before the committee, and he agrees that they are engaging in land banking.
Senator Ross Cadell gave an example about land banking in the Hunter Valley in NSW, and Mr Ramage agreed that it was an example, where supermarkets can buy a proxy through a developer, gain the centre, and remove the independence.
Senator Dean Smith followed up with more questions about land banking by the supermarket giants, and Mr Ramage responded that he didn't think it was "overt or obvious".
"It happens under the radar, there is no obligation for the majors to divulge when they acquire property, it's not illegal," Mr Ramage says, adding they notify the ACCC and councils when they see it happening.
But this is not the first time that supermarkets have been in the firing line for their anti-competitive conduct. It seems to be the nature of this industry. Brisbane-based property analyst Ross Elliot notes that a senior Westfield executive told him in the 1990s that “we would object to a competitor moving a plant pot if we thought it was in our interests to do so.”
In that 1990s era, we were equally concerned about such behaviour. Here’s a 1999 review of retail trade practices by supermarkets. It took the view that although there was a lot of consolidation in the sector, there were benefits from economies of scale to consumers. What is interesting to note from a quarter of a century in the future is that the market share of Coles and Woolworths hasn’t changed as much as you would think, up from around 55% to 65% (depending on how you count). But there is now no Franklins supermarket chain and we have A