Supermarket executives defended their practices, apologised to suppliers and even escaped the threat of jail during a fiery Australian 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 yesterday and both stated the sector remained competitive despite the size of their duopoly.
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.
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 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, 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.
“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 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.”
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