Discount supermarket chain Aldi has accused retail giants Coles and Safeway of muscling out smaller rivals by striking deals that prevent them from setting up business in suburban shopping centres.
The German-based grocery chain has called on the Australian Competition and Consumer Commission to investigate practices it says have limited its ability to trade in Victoria.
Aldi says the supermarket giants use shopping centre lease agreements to control tenancies by demanding huge rental reductions if a competitor is allowed access to the premises.
As shopping centre developers need high-profile "anchor tenants" such as Coles, Safeway, Kmart or Target to secure funding, attract other tenants and draw customers, the big retailers have the upper hand when negotiating decades-long leases.
Aldi claims its ability to open stores has been restricted because the leases — some 20 years old — effectively guarantee Coles or Safeway exclusive access to a site.
"There are a large amount of centres where we are restricted from entering because of covenants," said Aldi's managing director for Victoria, Tom Daunt.
"It can be an outright restriction on the use of land by a previous owner who might be a developer for a major supermarket.
"The other case is clauses in leases of major supermarkets which effectively restrict competitors with quite dramatic rent reductions (if a rival becomes a tenant in the same centre).
"Covenants on available land and clauses in leases, they are all similar. They are all restrictions of trade."
Mr Daunt said Aldi recently had been denied access to Greensborough Plaza and Roxborough Park shopping centres. Aldi and several other retailers raised the restriction issue in submissions to the ACCC inquiry into grocery prices.
ACCC chairman Graeme Samuel told The Sunday Age the matter had "loomed large" in the inquiry, which is due to report within weeks.
"It has been raised by a number of potential entrants to the marketplace and has been discussed with major landlords."
Mr Samuel said the ACCC had asked Coles, Woolworths and major shopping centre managers for information on restrictive practices.
Shopping Centre Council of Australia spokesman Milton Cockburn denied Aldi was being locked out of centres and said the council's members, including Westfield and Colonial First State, had "gone to extraordinary lengths" to bring Aldi in.
"Aldi has been operating in Australia for just over seven years and has opened 167 supermarkets. That's a rate of 24 a year."
However, Mr Cockburn said his members would not be sorry if the ACCC found the leasing practices were anti-competitive.
"Our members would like to see the back of them, very much. It is not something our members have done voluntarily; it was part and parcel of initial negotiations with original shopping centre owners," he said.
"If the ACCC finds in its report that these covenants are wrong, it will be of no concern to our members."
Coles chief operating officer (retail) Mick McMahon warned the ACCC that outlawing the restrictive clauses would "just change the nature of our discussion with the landlords".
He said Coles would be happy to discuss the leases, but unless commercial considerations were taken into account, companies and landlords would not be able to invest with certainty.
"If you are making an investment for 20 years and rents can only go one way, if a new supermarket opens up you lose 50pc of your sales … and your rent is still here, that is a big problem," Mr McMahon said.
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