You won’t read about it in the Fairfax or News Ltd press given the vast advertising spent by Woolworths, but the bottom line of yesterday’s 2006-07 profit performance by Australia’s biggest retailer was that brutally abusing market power pays.

Woolies is now worth a staggering $34 billion and much of that comes from its lucrative duopoly with Coles that is now extending to more ruthless Chinese sourcing and burgeoning private labels – albeit some with some questionable claims as we’ve seen with tissues in recent days.

Chief executive Michael Luscombe has clearly heeded the warnings from Kevin Rudd about supermarket prices as he tried to emphasise price cuts for consumers yesterday. However, such claims beggar belief when your net profit has gone up 27.5% to $1.3 billion and is forecast to rise by a further 20% in 2007-08.

Luscombe yesterday laid out what looks like being an elaborate defence of this dominance. The PR strategy starts with the “I’m just a humble shop keeper” garbage but then quickly stiffens with a claims that Woolies enjoys a grocery market share of just 29%, so the duopoly is nothing like 80%.

Okay Michael, here’s a challenge. Please point to another economy where the biggest two retailers are so dominant. And we’re not just talking the core grocery business. What about petrol? Coles and Woolies have gone from nothing to 40% in less than a decade and this is unprecedented globally.

The same goes for the grog market, where Coles and Woolies have a stranglehold. We even have the bizarre situation of Woolies being the largest venue operator of poker machines in the country with the highest per capita punting rate in the world. Sad, isn’t it?

But like with most market abusers, Woolies just can’t get enough. Despite a failed tilt at the politically savvy pharmacists, the juggernaut is now moving into financial services with a Woolies credit card to be launched next year.

And then there’s the push into private labels. Having screwed name brand suppliers to within breaking point, now they are further undercutting them with nameless stuff that delivers fatter margins.

Not only do Woolies pay badly, they’re also systematically late. The statistics do not lie. Australia’s biggest retailer had inventories of just $2.74 billion as at 30 June but its trade payables were a whopping $4.184 billion. Wouldn’t all retailers love to have negative inventory of $1.44 billion.

Having seen Chris Corrigan cop what he claims is a vengeful judicial attack from the ACCC and Telstra fail in its campaign against the government, Luscombe is playing the regulators more astutely. Graeme Samuel got a courtesy call from Luscombe over the weekend advising him of the tissue recall. What a polite man.

Why would any regulator want to take him on?