When Meredith Dairy cheese goes on sale its legions of fans collectively lose the plot. But some discounts from smaller retailers were so great Meredith Dairy felt its product was being devalued. To combat the issue, it proposed setting a minimum price on its much-loved goat’s cheese with the Australian Competition and Consumer Commission (ACCC).
“It was about loss-leading practices in the market. In a nutshell, there was a perception that we were treating a small number of customers more favourably than a majority of customers,” Meredith Dairy marketing manager Rugby Wilson tells Broadsheet. “This created a downward price pressure on the product that was increasingly affecting the wholesale price.”
Meredith Dairy claimed small retailers competed with larger suppliers by advertising special discounts on its products in order to draw in new customers. The practice is known as “loss leader selling”, and a supplier can withhold goods if it occurs. Meredith Dairy argued to the ACCC that proving cases of loss leading is difficult, and the business protections currently in place are ineffective.
The family-owned producer lodged a resale price maintenance notification with the consumer watchdog to prevent retailers from selling its goats cheese products below a specified cost. While a supplier can recommend an appropriate price to retailers, setting a minimum price is illegal without ACCC approval.
Meredith Dairy’s proposal was rejected on Wednesday after the ACCC decided regulating retail competition was not in the public interest and would not jeopardise ongoing investment in Meredith Dairy.
“The proposed minimum retail prices would mean retailers who are currently offering cheeses at lower prices to consumers could no longer do so,” says ACCC Commissioner Roger Featherston in a statement. “It would also reduce the competitive pressure on other retailers to offer lower prices, including major supermarket chains.”
Wilson says Meredith Dairy is unlikely to appeal the decision.
“We are just going to let it sit until the end of the month … but there is a fair chance we won’t go any further with it.”
“We certainly thought we had a case to put to them. We wanted to have a conversation about price with our customers. If we had been granted immunity we would have been able to better discuss with our customers the perception that we were treating some of them more favourably then others.”