Woolworths CEO threatened with contempt charge in Senate supermarket price inquiry

In a dramatic turn of events that has captured the attention of consumers and industry watchers alike, Woolworths CEO Brad Banducci found himself in hot water during a Senate inquiry, facing threats of jail time and fines for his reticence in discussing the supermarket giant's substantial profits.


The Senate inquiry, which has been delving into the pricing practices of Australia's major supermarkets, sought to uncover the details behind Woolworths' impressive $1.7 billion profit after tax in the most recent financial year.

Senators were particularly interested in the company's return on equity—a vital indicator of profitability.

However, Banducci sidestepped these inquiries, choosing instead to discuss another metric.


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Outgoing Woolworths CEO Brad Banducci earned the ire of a Greens senator over his response to a question on the supermarket’s return on equity. Image Credit: YouTube/ABC News (Australia)


'We measure return on investment, which we think is the right way of measuring profitability in a company,' Banducci stated.

Return on investment (ROI) measures how profitable an investment is compared to its cost.

On the other hand, return on equity (ROE) checks how well a company uses its shareholders' money to make profits.

Banducci’s response did not satisfy inquiry chair Greens senator Nick McKim, who then issued a warning.

‘I feel compelled to advise you that it is open to the Senate to hold a witness in contempt when they refuse to answer a legitimate question,’ he said.

This serious charge carries a fine of up to $5000 and a potential six-month prison sentence.

The standoff led to a suspension of the hearings, highlighting the intense scrutiny over the profit margins of Woolworths and its main competitor, Coles.

The two supermarkets, which command about two-thirds of Australia's supermarket sector, have been accused of price gouging.


Senator McKim did not mince words when he accused Banducci of selectively presenting data to downplay the company's profitability.

'The fact that (Woolworths' return on equity) is 26 per cent in a year where you made $1.7 billion in profits shows that your company is making off like bandits and effectively has a licence to print money,' McKim said.

He accused Woolworths of using its market dominance to pressure suppliers, including farmers, to reduce wages, compromise staff safety, and overcharge customers.

Banducci denied any allegations of price gouging, stating, 'It’s very hard to say that we have price gouging. I would respectfully submit that this is an incredibly competitive market and that is good for consumers.'

He attributed the rising prices at the checkout to grocery inflation, which he claimed was driven by cost increases from global consumer goods suppliers and the cyclical impacts on domestic fresh food markets.

Despite the CEO's assurances, the inquiry comes at a time when many Australians are feeling the pinch of the cost of living crisis.

Banducci's comments about grocery inflation and the competitive market did little to assuage concerns about the affordability of everyday essentials.


This Senate inquiry is not the only challenge Banducci has faced recently.

His resignation from the top job was announced in February following an interview with ABC's Four Corners, where he struggled to answer questions about Woolworths' market share.

Banducci is set to step down as chief executive at the end of August.


Source: YouTube/ABC News (Australia)

As the inquiry continues, with Coles chief executive Leah Weckert also scheduled to appear, the spotlight remains on the practices of Australia's supermarket behemoths.

The inquiry's timing coincides with a review of the voluntary Food and Grocery Code of Conduct, which governs the relationship between supermarkets and suppliers.

The review has recommended that the code be made mandatory, with significant financial penalties for breaches.
Key Takeaways

  • Woolworths CEO Brad Banducci was threatened with jail and a fine for not answering questions at a Senate inquiry regarding the company's profits.
  • The inquiry chair accused Woolworths of price gouging and exploiting market dominance to the detriment of suppliers, employees, and customers.
  • Woolworths reported a $1.7 billion profit after tax in the most recent financial year, and its return on equity was a key point of contention.
  • There is ongoing scrutiny of major supermarkets, with a review suggesting that the voluntary Food and Grocery Code of Conduct should be made mandatory.
For many, this unfolding story is more than just corporate drama—it's a matter that hits close to home.

Have price increases affected your budget? Do you feel that the market is as competitive as it should be? Share your thoughts in the comments below!
 
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We have seen these inquiries with Qantas, and no action was taken as the CEO had much of the Gov't in his pocket. Then the Insurance inquiry, which will not go anywhere, and now this inquiry into Supermarkets; why has this inquiry not asked the suppliers like the farmers/ vegetable or Fruit growers to give evidence of what they are paid for, and why have these supermarkets rejected items like crooked carrots, or blemishes which don't affect quality. They do this so they can charge a premium to the customer
 
The Islamists have hijacked Woolworths courtesy of Mehreen Faruqi and her Greens party. They want democracy dead.
 
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Yesterday, I put this response up on an earlier thread about when Banducci walked out on the ABC interview. My response was in reply to someone who was supporting the actions of Banducci at this current senate inquiry....

I just can't find myself supporting Banducci or Woolworths or Coles in that type of scenario with a Senate inquiry that is looking into fair pricing and whether meaningful competition in supermarkets exists in this country.

I for one think there is a need to shine a light on the behaviour of the duopoly, which in effect, in my opinion, operates as a monopoly on the big issues.

The way I look at it is to question why Banducci didn't want to pass on a simple bit of information to a parliamentary committee. If the information is so meaningless, then why crap on for 2 hours in refusing to answer. It doesn't matter how obtuse the question is, if a person in Banducci's position is happy to treat the inquiry in such a disrespectful way, and waste 2 hours of everyone's valuable time, then what twist has been put on other questions.

There are ways and means of answering a simple question put to you by a senate Inquiry. Probably the way he answered after 2 hours would have been good at the start. It was something like: I don't know the answer and I will take the question on notice.

It would seem that Banducci's, largely PR exercise when he appeared has some appeal, but I don't feel the slightest bit of empathy for him, even if I imagine walking in his shoes.
 
Brad Banducci earnt $8.4m in total remuneration last year and states he doesn't know Woolworths' return on equity. His frame of mind is he shouldn't have to answer to anyone.
Australians know that supermarkets are price gouging.
He's also leaving the role in a couple of months, why would he even give a s#!t. He'll be back in Sth Africa by years end (before the results of this sham hearing are released).
 
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the grandstanding by the (unelected) senate is the greater problem. Nothing will come from this, other than a greens senator increasing his 'profile' but absolutely nothing will result. No other country uses the measure that was referenced, the value of the share is not the measure used. Will wait to see if the Aldi representative can answer the same question as it's not a listed company so the measure is not relevant.
 
Brad Banducci earnt $8.4m in total remuneration last year and states he doesn't know Woolworths' return on equity. His frame of mind is he shouldn't have to answer to anyone.
Australians know that supermarkets are price gouging.
It was a Dorothy Dixer question, no other country uses the measure that was put forward. No company uses 'return of equity' as a measure of their performance. Pure grandstanding by this senator (another over paid unelected member of the senate).
 
The Islamists have hijacked Woolworths courtesy of Mehreen Faruqi and her Greens party. They want democracy dead.
To be able to question people like Banducci about the fairness of the manner his company is making huge profits at a time he is increasing prices, again, at a time when many Australian's can least afford it is indeed democracy in action.

Banducci's contempt for us in his refusal to talk about profit metrics at a time when he has been given a chance to explain the massive profits, says it all for me.

He doesn't give a shit about the Australians who are struggling beyond raking in their hard earns to enable him to personally meet his KPI's for a bonus that gives him more shekels to grub out of the dirt, then run away from his job to count it gleefully.

Most Australians who do the family shopping, simply just know what's going on with the whole pricing thing. Those that don't shop, simply put, just wouldn't know what's really going on.

The ridiculous notion that the senate inquiry is about wanting democracy dead is not worth responding to except the opportunity to make the point above.
 
It was a Dorothy Dixer question, no other country uses the measure that was put forward. No company uses 'return of equity' as a measure of their performance. Pure grandstanding by this senator (another over paid unelected member of the senate).
As much as I'm not a fan of politicians, how I understood the question to Banducci was to find out how much profit Woolies made, which he sought to dodge ie eg. was it 30% profit??
It's all about the share holders with big corporation CEOs.
 

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