Supermarket inquiry lays out plan for pricing crackdown

The creation of a new regulator targeting anticompetitive practices and beefing up laws to protect consumers at the checkout are among the key recommendations made by a Greens-led Senate inquiry into supermarket prices.

The Senate inquiry – chaired by Greens senator Nick McKim, who last month warned Woolworths boss Brad Banducci of the risk of jail time during hearing proceedings – on Tuesday released its final report and 14 recommendations including powers to break up big supermarkets, a strengthened food and grocery code of conduct, and the closer examination of land banking practices.

The Senate select committee on supermarket prices has released its final report.

The committee said it was a “matter of priority” that the Albanese government create a commission that would look at how various industries set prices along the supply chain, investigate mark-ups and profits, and conduct market studies to review what other restrictions are muffling competition and leading to higher prices.

“Such a commission would work in collaboration with the ACCC [Australian Competition and Consumer Commission], where high-level breaches of regulation would be referred to the ACCC for investigation and prosecution,” the inquiry report said.

“However, a commission could work more holistically on competition issues and have a more detailed pricing oversight function than would be appropriate for the ACCC, including requiring data transparency from supermarkets and publishing regular reports on pricing trends.”

This new body, the report recommended, should also be granted powers to force supermarkets to publish pricing data and provide access to profit data and price-setting policies. It said supermarkets should also publish reports at least annually.

While the Senate committee has jointly called for divestiture powers specific to the supermarket sector, the committee is split about the Greens-led divestiture bill that is currently tabled before the Senate.

“The committee was unable to agree whether the Senate should pass the Australian Greens’ Competition and Consumer Amendment (Divestiture Powers) Bill 2024, that would introduce economy-wide divestiture powers into Australia’s competition law,” McKim said in the chair’s notes.

Prime Minister Anthony Albanese has previously rubbished divestiture laws, and told ABC radio in February that there is a “private sector economy in Australia, and not a command and control economy. We’re not the old Soviet Union.”

The inquiry report also recommended that price-gouging be banned by amending section 46 of the Competition and Consumer Act, to make it an offence to charge excessive prices.

“The question of whether price-gouging exists in the supermarket sector was at the heart of this inquiry,” the report said.

“The answer seems to be resounding yes, with it occurring in many and varied ways. While many of those ways appear minor on the surface – a dollar here, a fraction of a percentage there – they add up incrementally. Taken as a whole, those individual activities create a picture of an industry driven by profits at the expense of consumers, who have a right to affordable and nutritious food.

“The evidence brought forward by people willing to speak out about the business practices of Coles and Woolworths suggests that maintaining margins and increasing margin growth is occurring at the expense of suppliers, consumers, and best business practices, and without proper justification.”

The report also called for the grocery code of conduct be made mandatory – a recommendation also made by Dr Craig Emerson, who is reviewing the code. However, the Senate committee went a step further by calling for the plant and seedling industry to be included in the code, along with retailers selling groceries such as Amazon, Costco and Chemist Warehouse. Bunnings has already rejected calls for it to be included in the code.

In a statement, Coles said it was committed to providing values to customers but indicated it did not support the recommendations.

“To the extent that the recommendations are likely to adversely impact the operation of open and free competitive markets in the provision of food and grocery in Australia, we would not support the recommendations,” the supermarket said.

Woolworths said it was taking the time to review the report. Both supermarkets have previously expressed support for a mandatory food and grocery code of conduct.

The Senate committee has also recommended a raft of new powers for the ACCC, including stronger merger law reforms that would see the regulator notified if deals of a certain size were to take place, powers to investigate land banking. The supermarkets should also be forced to adopt a standard form of practice when it comes to unit pricing that would show changes in price and size, introduce standards around discounts and promotional words.

The 2017 National Food Waste Strategy, which sits under the Department of Climate Change, Energy, Environment and Water, should also be updated to include a national approach to food waste that considers reforms on use-by and best-before dates, examines whether “unrealistic cosmetic standards” are contributing to food waste, and requires supermarkets publish data on food waste volumes.

The role of multinationals and ‘big box’ retailers should also be referred to the Senate Economics References Committee for further inquiry, according to the committee.

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