Splitting up Supermarkets Could Lead to Price Increases, Warns Business

In a bid to ease the burden of rising living costs, Australians may soon face potential hikes in prices, warns a prominent business authority.

The country’s leading supermarket giants, Coles and Woolworths, have been facing mounting criticism for allegedly exploiting consumers by charging higher prices while reaping record profits, leaving many struggling to afford essential groceries.

In response to these concerns, the Greens have introduced a Senate bill that would grant authorities the power to break up these retail giants under competition laws. This would curtail their market dominance and prevent unjust price increases that disproportionately affect consumers and disadvantage farmers.

While this proposal garners support from certain political factions, Bran Black, CEO of the Business Council of Australia, argues that it could worsen financial strains and jeopardise employment opportunities. He contends that rushing through such legislation without addressing fundamental issues like price transparency and inflation could inadvertently lead to unintended consequences, including heightened consumer prices.

Mr. Black draws attention to previous competition policy reviews, such as the 2015 Harper Review, which caution against overly broad divestiture laws due to potential adverse effects on consumer well-being. He also highlights concerns about the potential for courts and consumer watchdogs to determine which businesses should be broken up, raising uncertainties about job security.

Nevertheless, similar laws are already in place in several countries, such as the United Kingdom, the United States, Ireland, Italy, and the Netherlands, and they have received support from former Australian Competition and Consumer Commission chair Allan Fels.

Prime Minister Anthony Albanese has dismissed the idea of implementing divestiture laws, emphasising that Australia operates under a market economy, not a centrally planned system like the Soviet Union. Meanwhile, the Liberal Party’s stance on the proposal remains unclear.

Despite this, the government has taken steps to address concerns surrounding supermarket practices, launching parliamentary inquiries and independent investigations. Reviews of the Food and Grocery Code of Conduct, which regulates relationships between supermarkets and suppliers, are also underway, and consumer watchdogs have called for inquiries into supermarket pricing practices.

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