Woolworths, Australia's largest food retailer, has hit back at claims that it avoids competition with rival Coles and that its pricing power forces suppliers out of business.

The company insisted today (28 March) that food retailing in Australia was "very competitive" after the head of local independent retailers in the country claimed action was needed to boost competition in the sector.

On Wednesday, John Cummings, chairman of the National Association of Retail Grocers of Australia (NARGA), launched a bitter attack on Woolworths and Coles, which he claimed account for around 80% of the country's food retail sector.

Cummings accused the retailers of avoiding competition with each other, of blocking new entrants to the industry through property agreements and of forcing smaller suppliers out of business.

However, Woolworths told just-food that there is "vigorous competition" among food retailers in the country.

"There is a high level of competition in the Australian grocery industry with Woolworths holding little more than 30% of the market place," the company said. "Vigorous competition comes in the form of the Coles, Metcash/IGA - which NARGA represents - and FoodWorks chains as well as the growing independent sector."

Woolworths also countered Cummings' claims that new entrants found it hard to expand or enter the Australian food retailing sector.

"The evidence is that there are lots of new entrants popping up all the time in Australia. NARGA's own IGA stores have increased in number by 118 stores over the last five years to 1,256, compared to Woolworths, which has only added 73 stores to reach 760."

On its supplier base, Woolworths claimed it has a "good relationship with both wholesalers and direct growers".

The row comes as the Australian Competition and Consumer Commission studies grocery prices in the country.

The Australian government handed the ACCC the task in January in a bid, it said, to ensure consumers get a "fair deal at the supermarket".

The ACCC is due to publish its findings in July but Cummings has questioned whether the watchdog was the right body for the job.

"It would appear that the regulator has been sitting in the stands cheering on Woolworths and Coles since 1974 as the growth in market share has been constant and consistent," he said.

"The previous government asked the ACCC to report on petrol pricing and the best the ACCC could do was come up with a report which said not much at all - and that in an industry with, effectively, only four product lines. What will they be able to make of an industry in which a major supermarket might carry 25,000 different product lines?"