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Push to make unfair food prices illegal

Cost of Living
Australia’s highly concentrated supermarket sector has come under the microscope over the past six months. Picture: Dan Peled/NCA NewsWire.

Supermarket giants found to be overcharging customers could face criminal penalties if the government adopts the findings of a scathing new review.

A Greens-led Senate committee tasked to investigate supermarket pricing practices released its final findings on Tuesday.

The report, which backs proposed divestiture laws to break up grocery chains that abuse their market power, said Australia’s supermarket industry has been “driven by profits at the expense of consumers” and called for stronger laws to deter unfair price increases at the checkout.

It said evidence brought forward by farmers and consumer groups willing to speak out about Coles and Woolworths suggests increasing margin growth was occurring “without justification” at the expense of shoppers and suppliers.

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“The committee therefore recommends that section 46 of the Competition and Consumer Act 2010 be amended to make it an offence to charge excessive prices, in terms similar to the European Union provisions,” the report said.

SUPERMARKET PRICES
Committee chair Greens Senator Nick McKim said the laws would be significant. Picture: NCA NewsWire / Martin Ollman

The probe, which made a total of 14 recommendations, backed proposed reforms to create divestiture powers for supermarkets if they have been found guilty of misusing their market power or engaging in anticompetitive conduct.

It also recommended that the government urgently establish a Commission on Prices and Competition to examine prices and price-setting practices.

Calls for “big stick” laws move against the findings of an interim review led by former Labor minister Craig Emerson, which rejected suggestions for break-up powers and instead proposed supermarkets and suppliers follow a mandatory code of conduct backed up by stiff penalties

Prime Minister Anthony Albanese also rubbished suggestions for divestiture laws in February, telling reporters that Australia was not “the old Soviet Union.”

SUPERMARKET PRICES
Woolworths has been given three months to respond. Picture: NCA NewsWire / Martin Ollman

The Greens have introduced a bill to parliament to create powers to force Coles and Woolworths to sell parts of their business to discourage anti competitive behaviour.

Both supermarket chains have opposed the idea due to the risk of “unintended consequences” but have supported an overhaul of the grocery code of conduct.

In a statement, a Woolworths spokesman said the company would take its time to consider the report’s recommendations.

A Coles spokesman rejected the findings, arguing that divestiture laws would risk “adversely impact the operation of open and free competitive markets in the provision of food and grocery in Australia.”

COLES WOOLWORTHS
Food prices rose 7.5 per cent in the 12 months to August 2023. Picture: Jeremy Piper/NCA NewsWire.

Woolworths, Coles and Aldi, along with the wholesaler Metcash, have a collective market share of 80 per cent of Australia’s grocery market.

During public hearings, farmers groups alleged supermarkets were raking in excessive profits by marking down prices on in-store products and offering farmers less for the same item.

It also heard evidence that some farmers were receiving prices for their produce from Coles and Woolworths that hadn’t changed in more than 10 years.

The Senate inquiry has been one of multiple inquiries investigating Australia’s grocery sector amid concerns over high grocery prices and rising cost-of-living.