Business
New Laws Put Coles and Woolworths Under Price-Gouging Scrutiny
Australia will become the first country to introduce supermarket-specific anti-price-gouging laws, giving the ACCC new powers to monitor pricing practices at Coles and Woolworths.
Australia’s excessive pricing regulations to combat big-supermarket greed hit Coles and Woolworths on July 1. It places supermarkets on a tougher compliance regime enforced by the Competition and Consumer Commission (ACCC) and follows the Government’s reforms recommending the Food and Grocery Code of Conduct.
Supermarkets would be barred from pricing goods and products that are excessively high, but no set figure has been given.
Rather the ACCC would weigh market circumstances, wholesale costs, operational expenses, and appropriate commercial margins.
Mandatory Code Enters a New Phase
New pricing rules will apply to the biggest supermarkets, including the country's top two retailers Coles and Woolworths who make more than $30 billion a year and can face fines of up to $10 million if they fail.
The competition regulator said it will closely track retail prices following the reforms and specifically monitor grocery categories likely to come under scrutiny as well as responding to any customer or supplier complaints.
“The most concentrated grocery sector,” ACCC report 2024-25 said of the Australian market. Australia's grocery market concentration is higher than any other advanced economy with Coles and Woolworths sharing the lion's share. The supermarket inquiry said profit margins have jumped but did not consider if this breached competition laws.
The competition agency has recommended tighter regulations and bigger fines for a compulsory grocery code as well as greater protections for suppliers.
Woolworths group last reported $67.9 billion in earnings per year and Coles $43.7 billion, well above the threshold for inclusion in the mandatory Code.
Concentrated Market Remains at the Centre
The retailers are concerned about how vague the rules around excessive prices could impact business. The retailers are seeking clarification from the ACCC about its role.
Coles supermarket’s net profit margins on food are low and there’s a risk additional compliance measures could introduce increased expenses. Woolworths is focused on the need for greater clarity regarding the scope of the ACCC’s role in reviewing retail pricing decisions and that the Code applies only to Coles and Woolworths. The Government is diverging from a global trend.
The UK is increasing oversight; Canada has beefed up competition reform; the EU generally shuns general price gouging laws and instead addresses high pricing within general competition principles.
Source: AFR
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