Luciano Azzaro’s Post

In the latest issue of International Association of Assessing Officers (IAAO)'s Fair and Equitable magazine, don’t miss Shail Jain's must-read article: "Taking the Longview for Success: Navigating the Unknown to Responsibly Revolutionize Mass Appraisal." 📖 Pages 40-42 dive deep into the strategic vision needed to revolutionize mass appraisal systems while ensuring the responsible adoption of new technology. Read it here: https://lnkd.in/eAy9AnNQ

The Australian Shareholders' Association was featured in The Australian Financial Review yesterday. Business leaders are pushing back against proposed legislation by the Greens party, aiming to grant the Federal Court powers to break up major grocery retailers like Coles and Woolworths. The bill, intended to address market concentration concerns and foster competition in the food and grocery sector, is facing resistance. Opponents, including the Business Council of Australia (BCA), argue that such measures could lead to higher grocery prices, job losses, and supply chain disruptions. Prime Minister Anthony Albanese and Liberal Party members have voiced opposition, emphasizing the importance of robust businesses in the economy. The ASA defends the profits earned by companies like Coles and Woolworths, noting their higher returns on capital compared to other firms. You can read the full article here: https://lnkd.in/g9hhR_3s

This is a step forward. But free market doesn't mean monopolies and oligopolies. It means effective fierce competition. Australia's lack of fierce competition has allowed global capital markets to step in an earn outsized yields that would otherwise have gone to consumers and producers. And corruption in Australian politics from too cozy a relationship between politicians and "elitists" is enabling politicians to exert corrupt control over oligopoly's that has meant we have a "managed economy" ... not free markets. The milk price wars weren't the outcome of a free market. They were the outcome of political interference in the economy driven by very serious corruption (an asset stripping agenda that ultimately led to BREXIT). And the attack on our diary farming families is tied back to their rejection of very serious corruption in Australian politics, and to freedom from slavery with links to the British Monarchy (a young Queen Victoria) - https://lnkd.in/gnG5k53G . It is not in our national interest to cover this analysis up. It is only in the interests of deeply corrupt politicians, who are representing a criminal plutocracy.

Around the world competition regulation is changing, and Australia is embracing this trend. Last week we saw the Federal Opposition discuss breaking up the big retailers, a significant policy departure which the Prime Minister described as more “supermarxist” than supermarkets. Recently, the ACCC has also intervened in the sale of assets from Lendlease to Stockland, which is recognised as unusual for a competition regulator to get involved in a property deal.   What is interesting about how competition is now being viewed, is that it is not always driven by consumer benefit. This has evolved over the years. As companies like Standard Oil were broken up at the turn of last century, household oil prices were falling dramatically. Then, in the 1970s, with the release of his seminal work, The Antitrust Paradox, Robert Bork convinced courts around the world to assess consumer welfare. In other words, if consumers benefit, what’s the harm? Now, due to the intellectual leadership of people like Lina Khan, Chair of the US Federal Trade Commission, lower prices are not alone sufficient.   There are two interesting issues for business in all this.   First, if consumer welfare is insufficient, then it is not only a higher test, but analytically the benefit is harder for businesses to prove.   Second, at the heart of all this is that people are inherently nervous about the size of companies (not just their behaviour) - despite consumers being able to gain from economies of scale, synergies and portfolio benefits.   It did not seem that long ago that former ACCC head Rod Sims dismissed this as the “hipster antitrust movement.”   So, it will be interesting to see where Australian competition regulation lands, as this new approach has also created problems for global regulators too. Internationally, big test cases have faltered and there is no clear remedy or structural change articulated if a breakup was to occur.   #CompetitionRegulation #CompetitionLaw

Watching the senate supermarket inquiry with fascination. After refusing to answer the question, outgoing Woolworths CEO Brad Banducci says he doesn't know what Woolworths return on equity is (It has averaged 25.3% over the past 5-years, Coles has averaged 33.9%). Coles CEO Leah Weckert says you need to take into account that the stores themselves are leased (i.e. add financial leverage and the cost of equity). So what should the senators ask next? It would be reasonable to ask what Coles/Woolworths cost of equity is. If properly formulated, this will take into account debt and building leases. If the return on equity well exceeds the cost of equity, you could argue the supermarkets are generating super-profits. I doubt it will be as high as the return on equity though. A return on each dollar of shareholder retained equity exceeding 20% is an attractive return by any measure, even though this is leveraged by debt and building leases. The equity market must have expected that return on equity though, because as a shareholder, I haven't seen any total shareholder return (TSR) outperformance in Woolworths shares since before the pandemic.

Australian Senate calls for legislation against supermarket price gouging - In a recent Senate inquiry report released by the Greens party, recommendations were made to address issues of supermarket price gouging in the Australian market. The report suggests making supermarket price gouging illegal and implementing divestiture laws to break up the market dominance of major supermarket chains. Senator Nick McKim, the committee chair, emphasized the importance of these recommendations in rectifying the harm caused to consumers in Australia. He highlighted the need for concrete steps to tackle the longstanding issue of unreasonable pricing practices by major corporations. One of the key recommendations in the report is to criminalize price gouging,... - https://lnkd.in/gHdqHWJu

The Competition Bureau has obtained two court orders to advance its investigations into Empire Company Limited's and George Weston Limited's use of property controls. Empire is the parent company of Sobeys Inc. and George Weston is the parent company of Loblaw Companies Limited, the Competition Bureau announced June 11, 2024. "The orders, granted by the Federal Court, require the companies to produce records and information relevant to the Bureau's investigations. The investigations are currently focused on assessing the use of property controls in the Halifax Regional Municipality." "This information will help determine whether Sobeys and Loblaw are imposing anti-competitive restrictions on the use of real estate, known as property controls, that impact competition in the retail sale of food products. This includes examining whether they are restricting or excluding their competitors through exclusivity clauses and restrictive covenants. There is no conclusion of wrongdoing at this time." https://lnkd.in/gZ4EQhGp #retail #leasing #canada #grocery

In a recent pricing inquiry by the Australian Council of Trade Unions (ACTU), various pricing strategies used by supermarkets, banks, and airlines have come under scrutiny for their disruptive impact on the market. Drip pricing, where additional charges are gradually revealed during the purchasing process, and “excuse-flation,” which justifies price hikes using general inflation, have drawn particular criticism from customers and regulatory bodies. Confusion pricing, loyalty taxes, price discrimination, and rockets and feathers pricing are also highlighted as concerning practices. ACTU labels these practices as “exploitative,” contributing to the cost-of-living crisis by exploiting weak competition and creating an imbalance between consumers and businesses. While not breaching any laws, they pose risks to consumer trust and brand reputation over time. Adapting strategies to anticipate consumer reactions and complying with regulations are essential for mitigating risks and fostering stronger customer relationships while balancing profitability with customer satisfaction. #pricingnews #taylorwellspricing #drippricing Blogs: https://lnkd.in/g72Ejivb Source: https://lnkd.in/gx9zrBq9

(AUSTRALIA 19.03.24) Watchdog would get powers to ‘smash’ supermarket duopoly under Greens bill. The Greens are introducing a bill in Australian Parliament that would grant the competition regulator powers to break up major supermarket chains like Coles and Woolworths in order to combat their market dominance. The proposed legislation would allow the Australian Competition and Consumer Commission (ACCC) to seek court orders mandating the sale of assets if a company's market power is unfairly inflating prices or hindering competition. While the bill targets supermarkets specifically, it could apply to other large businesses as well. Supporters argue that such measures would promote fair competition and benefit consumers by reducing prices. However, some skeptics, including former ACCC chair Allan Fels, believe that while divestiture powers are important, they might not substantially change the supermarket landscape. Nonetheless, proponents assert that empowering regulators to address market dominance would encourage companies to prioritize consumer interests over profits across various sectors of the economy. --- Financial Review (22.01.24): In the shopping trolley war, the supermarkets have to give https://lnkd.in/gSyZx-3P The review of the Food and Grocery Code of Conduct aims to improve suppliers' bargaining power with major supermarkets without necessarily raising prices for consumers. While Australia's grocery retail market is highly concentrated, efforts to increase competition could benefit both suppliers and consumers. Measures such as the ACCC inquiry and potential divestiture powers are proposed to address market dominance. Pro-competition options include making the code mandatory, revising planning and zoning laws, and facilitating entry for new competitors like Aldi and Costco. Overall, enhancing competition is seen as essential for achieving fair prices for both suppliers and consumers in the grocery market. https://lnkd.in/gasxfQwm

TWE to offload its Wolf Blass, Yellowglen, Lindeman’s, and Blossom Hill wine brands🍇🍷 This morning, Treasury Wine Estates announced to the ASX that it intends to divest its Commercial Brand portfolio by recognising a non-cash impairment charge of $290 million after tax in its F24 full-year results. Defined by its sub $10 price point, the Commercial Brands in this portfolio include Wolf Blass, Yellowglen, Lindeman’s, and Blossom Hill. “Following the latest review of the carrying value of the Group’s assets as part of its annual impairment testing process, TWE will recognise a non-cash impairment charge of $354m ($290m post-tax) in its financial result for the year ended 30 June 2024 in relation to the TPB division,” read this morning’s ASX post. Read more: https://lnkd.in/eNcryWkA