Costco have been given planning approval by the NSW State Government for a second massive supermarket in Australia, this time in Auburn, Sydney.
The Costco superstore is planned for development on Parramatta Rd at Auburn, and due to its massive size (about 3-5 times bigger than a large Woolworths or Coles supermarket) the planning approval had to be given at the State Government level. The Auburn Costco will have about 14,000 square metres of shopping area and about 800 car parks.
The proposal had come under fire from some of Australia’s largest shopping centre owners, including AMP and Westfield who is the owner of two large shopping centres nearby at Parramatta and Burwood, who both argued the development would be “anti-competitive” for other retailers.
The Australian Managing Director of Costco, Patrick Noone in an interview earlier indicated that the store would be operating within a year of being granted planning approval, with distribution infrastructure already established for the chain’s Melbourne Docklands operation, which opened in August last year and now has over 50,000 members to it’s co-op shopping business model.
Prices at Costco are predicted to be on average 25 percent lower than similar products at competing retails, according to a report compiled by Essential Economic.
Competition and consumer law expert Frank Zumbo from the University of New South Wales was critical of the opposition the existing shopping centre owners gave the development, suggesting their opposition to Costco’s Auburn proposal had more to do with preserving their profits than concerns over competition.
“Needless to say, there is a danger that the various planning and zoning objections being made against Costco’s Auburn proposal may be an anti-competitive way to deny Sydney consumers much needed access to a new supermarket competitor.” He said.
Going further Mr Zumbo was concerned over the restrictions state planning laws have on competition in more than just the supermarket sector in Australia.
“Planning and zoning objections no matter how valid under State laws, need to be carefully considered within the context of our federal competition laws. After all, planning and zoning objections can used in a potentially anti-competitive manner and for that reason alone should, whenever lodged by competitors, be closely reviewed by the competition regulator for possible breaches of our competition laws.” Mr Zumbo said.
