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Fox lashes out at Woolies and Coles for 'dictating terms'

Release date: 8/02/2012

Trucking magnate Lindsay Fox has launched a scathing attack on Australia's major retailers, accusing them of "expecting everything for nothing", as farmers and grocery suppliers claim they are using their market power to demand cheaper prices.

Mr Fox, whose Linfox transport and logistics empire has multi-billion-dollar distribution contracts with Coles and Woolworths, said the retailers were too readily "dictating" terms throughout the retail supply chain -- including to Linfox.

"They are too big . . . You can't dictate the terms and conditions of what people have got to trade with you. And they are getting to that stage. They are trying to dictate to everyone," he told The Australian yesterday.

"They are expecting everything for nothing. They are going to crucify the farmers, crucify the bread manufacturers and if you spoke to most of the consumer goods manufacturers at the moment, you would get a very mixed response about the aspects of dealing with these companies."

His comments come as Australian Competition & Consumer Commission chairman Rod Sims this week promised a shield of secrecy for farmers and grocery suppliers who blow the whistle on retailers abusing their market power to demand cheaper prices.

Mr Sims claimed the regulator was having "trouble" launching prosecutions because suppliers were too "scared" to give evidence against big retailers.

Food manufacturers have accused the supermarkets of squeezing their savings from farmers and factories, while Julia Gillard recently called on all supermarket owners to treat farmers "fairly".

The Wesfarmers-owned Coles announced last week it would reduce the cost of selected fruit and vegetable products by up to 50 per cent.

But Coles has argued it is committed to sustainable farm production and has been working with its growers to ensure a fair return as a proportion of retail prices in their stores.

In the non-food space, Target demanded that its suppliers cut their prices by 5 per cent for all orders in the lead-up to Christmas.

Last year, retiring Foster's chairman David Crawford blamed the dominance of supermarket chains Coles and Woolworths for the brewer falling into the hands of London-based brewing giant SABMiller.

Asked how he would respond to their alleged strong-arm tactics, Mr Fox declined to comment except to say: "Beware of the anger of the patient man. They are flexing their muscles, but they can't get blood out of a stone."

Mr Fox also said Linfox would continue its push into Asia, revealing the company had put on 3500 extra staff in Southeast Asia last year compared to 500 in Western Australia's northwest and only one on the nation's eastern seaboard.

The group has operations in China, Malaysia, Thailand, Singapore, Indonesia, The Philippines, Vietnam and India. Asia is a key focus of business growth in Linfox's 2015 strategy. Forty per cent of its employees are now in the region. Linfox has a major contract with British retail giant Tesco in Thailand, where it already has 600 trucks and is about to put on another 400 before Easter.

"The Asian people are now on Western diets and like Western-style shopping.

"If you remember the first time you took a Singapore Airlines flight, the hostesses were as thin as that little pen in your hand. Now they are getting closer to my size. It is true. And that is happening all the way through Southeast Asia," he said.

Linfox does not participate in joint ventures or partnerships and Mr Fox said this would not change. "We grow businesses, unlike our opposition that buys them. Buying a business in Asia has to be looked at in the same light as an unsuccessful marriage. If you have a partner in Asia it is going to cost you a lot of money to break that partnership. You don't need a partner. We only have customers," he said. Mr Fox said Linfox was "going ok" in Australia and would "still make good money" this year. "It is very tough out there," he said.

Linfox also owns Melbourne's second and third-biggest airports and the Armaguard cash transport business. The group is overseen by Mr Fox's eldest son, Peter, who took over as executive chairman of the group 17 years ago.

Click to read the release on The Australian website

 

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