In a decisive move to address mounting concerns about price gouging in the supermarket industry, the Labor government has taken the bold step of directing the consumer watchdog to embark on a comprehensive 12-month inquiry. This decision comes in the wake of the government’s commitment to voters, a commitment that was somewhat derailed by its inability to deliver on stage three tax cuts.
As claims of anti-competitive behaviour by supermarkets persist, and retail prices continue to surge ahead of wholesale costs even as inflation experiences a slowdown, the Albanese government is taking proactive measures. One such measure involves establishing a FuelWatch-inspired website designed to enable consumers to compare the prices of thousands of supermarket products.
Marking the first thorough examination of supermarket pricing since 2008, Prime Minister Albanese emphasised that the inquiry will delve into the pricing practices of supermarkets and scrutinise the intricate relationship between wholesale prices, including those at the farmgate, and retail prices.
In Mr Albanese’s own words, “The ACCC has significant powers, and it is the best and most effective body to investigate supermarket prices. For me, it’s this simple. When farmers sell their products for less, supermarkets should charge Australians less. These actions send a very clear message – our government is prepared to take action to make sure that Australians are not paying one dollar more than they should for the things they need.”
This far-reaching investigation will also examine how online shopping, loyalty programs, and technological advancements are influencing competition within the industry.
Coles, a major player in the supermarket sector, has stated its commitment to cooperate fully with the ACCC during the year-long inquiry. In a statement, the company explained, “We are working hard to keep groceries affordable for Australian households and families, especially as they face escalating living costs with higher mortgages and rents and increasing expenses like energy and fuel. We are doing this against a challenging environment of high inflation, with rising costs that affect the whole economy, including farmers, suppliers, and retailers, and impact the prices customers pay at the checkout.”
Meanwhile, Nationals leader David Littleproud asserts that Labor’s decision to initiate the inquiry comes as a result of being “shamed” into action, having previously ignored warnings for over a year. He believes this delay in addressing soaring food prices is a stark indication that the government may not fully comprehend the extent of consumers’ financial struggles.
The Nationals had previously urged the government to launch the inquiry in November, citing evidence of significant price disparities between farmgate prices and supermarket checkout prices. As Mr Littleproud pointed out, “While Labor spent last year distracted on a $450 million failed voice referendum, the price disparity between the farmgate and the supermarket checkout was allowed to escalate out of control.”
Farmers, who have long advocated for action on this issue, welcomed the ACCC’s investigation and called upon the Albanese government to commit to implementing its recommendations. National Farmers Federation president David Jochinke emphasised the need for sustained political leadership and action, cautioning that past reports had often been shelved and that it’s time for tangible changes.
The last major inquiry into supermarket prices, conducted during the Rudd government, did not uncover price gouging, but it did highlight significant barriers to competition. These included exclusive agreements between Coles or Woolworths and shopping centre owners, preventing other supermarkets from renting space in those buildings.
The union movement has also thrown its weight behind the inquiry, asserting that working people have been “rorted by the supermarket duopoly.” ACTU assistant secretary Joseph Mitchell sees the establishment of the ACCC inquiry as an opportunity to scrutinise how major supermarkets are setting prices and to what extent ordinary Australians are being overcharged at the checkout.