It is unclear how the policy to force Coles and Woolworths to divest would work in practice. At present they have economies of scale and an effective duopoly that is not just national but at the local level.
For instance if Coles was forced to divest some of its stores would the now separate stores introduce any actual local competition? Is it assumed that Coles would then open new stores in the same area to compete with their former stores? How many separate stores could most areas actually sustain?
The buildings aren't really the most important part of the business despite often limited suitable locations, but rather the access to the supply and logistical network, which is inherently centralised and where the economies of scale come in.
So are we not talking about divesting stores but some other aspects of the business that would somehow introduce competition, and if so what?
Perhaps if stores are divested from Coles or Woolworths in each local market to create a new public alternative or confederation of co-operatives, though it would still have to develop a new supply and logistical network to be able to effectively compete.
In terms of competition policy I have often wondered that if instead of trying to reinject competition back into markets if it wouldn't make more sense to acknowledge that a company or companies have effectively won the competition, that market is now mature, so game over you're nationalised.
If after that the so-called free market wants to claim that private enterprise is inherently more innovative (without any real evidence) then they would be welcome to try and compete with the supposedly inefficient public sector.
