ACCC to conduct inquiry into supermarket competition and pricing

The Australian Government has announced it will direct the Australian Competition and Consumer Commission (ACCC) to investigate pricing and competition in the supermarket sector.

The move is the latest in the government’s multi-faceted battle to provide cost-of-living relief to Australians. It comes after record profits by major supermarket brands and accusations by farmer groups of extreme markups on fresh produce.

It also follows the implementation of a parallel review of the Food and Grocery Code of Conduct to be led by former Labor Minister Craig Emerson, which was announced in early January.

Prime Minister Anthony Albanese, Treasure Jim Chalmers, and Assistant Minister for Competition, Charities and Treasury Andrew Leigh said the 12-month ACCC inquiry will investigate the competitiveness of retail prices and the allegations of price gouging in the supermarket sector.

It says the ACCC will consider:

• The current structure of the supermarket industry at the supply, wholesale and retail levels
• Competition in the industry and how it has changed since 2008, including the growth of online shopping
• The competitiveness of small and independent retailers, including regional and remote areas
• The pricing practices of supermarkets
• Factors influencing prices along the supply chain, including the difference between farmgate and supermarket prices
• Any impediments to competitive pricing along the supply chain and
• Other factors impacting competition include loyalty programs and third-party discounts.

The inquiry is scheduled to publish an interim report this year and a final report with findings and recommendations in early 2025.

In addition to the ACCC inquiry, the government will also fund $1.1 million for consumer group CHOICE to compile quarterly price transparency and comparison reports over the next three years.

The Prime Minister said supermarkets should charge Australians less when farmers sell their product for less.

“That’s why the ACCC will use its significant powers to probe the difference between the price paid at the farm gate and the prices people pay at the checkout,” Mr Albanese said.

“My 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.”

Mr Chalmers added, “Australians are under cost-of-living pressure, and we know that a lot of that pressure is piled on at the cash register.

“This is about making our supermarkets as competitive as they can be so Australians get the best prices possible. We want a fair go for families and a fair go for farmers.”

Mr Leigh said competition is the consumer’s friend.

“Economics teaches us that monopolies tend to overcharge and underdeliver,” he said.

“Australia’s grocery sector is more concentrated than in other countries. The government has appointed respected policy economist Dr Craig Emerson to review the Food and Grocery Code of Conduct to look at whether the Code is effective in improving the conduct of supermarkets towards their suppliers.

“An ACCC inquiry and regular CHOICE reporting will complement this by making sure supermarkets are charging fair prices and by helping shoppers to save money.”

In a separate statement, ACCC Chair Gina Cass-Gottlieb said grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures.

“When it comes to fresh produce, we understand that many farmers are concerned about the weak correlation between the price they receive for their produce and the price consumers pay at the checkout,” she said.

“We will use our full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to government.

ACTU Assistant Secretary Joseph Mitchell welcomed the announcement, saying the inquiry was an appropriate response to the 2023 inquiry into price gouging and unfair pricing practices which was commissioned by the ACTU and conducted by former ACCC commissioner Professor Allan Fels.

“Professor Fels’ Price Gouging Inquiry has heard harrowing stories from hundreds of working people, from farmers and small businesses who have been rorted by the supermarket duopoly,” Mr Mitchell said.

“The Albanese government’s establishment of an ACCC inquiry is an opportunity to examine how the major supermarkets are setting prices and the extent to which ordinary Aussies are being ripped off at the checkout.”