Australia’s supermarket chains have clapped back against claims of price gouging, even as the major parties pledge to tackle steep grocery bills in the lead up to the federal election.
The cost of groceries have come front-and-centre amid a cost-of-living crisis and were the the subject of a year-long inquiry carried out by the Australian Competition and Consumer Commission (ACCC).
The inquiry found Coles, Woolworths and Aldi were among the most profitable supermarkets in the world and these large chains had little incentive to be competitive on pricing due to their large market share. However, it was unable to conclude whether price gouging was taking place.
As reported by SBS News, a Coles spokesperson said the rise in grocery prices largely reflected the increased cost of doing business. Coles and Woolworths have repeatedly rejected claims of price gouging.
“What’s needed are measures that tackle the real factors driving higher grocery prices, which are rising costs such as energy, fuel, labour, insurance, production, freight and distribution,” the spokesperson said in a statement on Sunday.
A Woolworths Group spokesperson stated there was substantial paperwork and data points supplied to the supermarket inquiry to explain how economy-wide inflation has been impacting suppliers.
“We recognise our customers have experienced several years of significant inflation, with an escalation in the cost of mortgages, rent, transport, insurance, energy, food and many other household essentials,” they said.
The spokesperson added that Woolworths has already taken action on many of the ACCC report’s recommendations to improve the experience and transparency for customers and suppliers.
Peak retail body Australian Retailers Association (ARA) described the continued focus on supermarkets as a “distraction” from broader community and business policies during an election campaign.
According to ARA chief industry affairs officer Fleur Brown, there have been at least eight taxpayer-funded inquiries thus far which have yet to find evidence of price gouging.
In addition to the recent ACCC review, Coles and Woolworths have faced two federal Senate inquiries, state inquiries in Victoria, Queensland and South Australia, a food and grocery code review and the Albanese government’s competition policy review since 2022, as reported by the Australian Financial Review.
“The ACCC’s findings clearly states that grocery inflation has been driven higher by the cost of wages, energy and fuel. Yet instead of hearing how the government will address these issues which significantly affect all Australian retailers and consumers, we unfortunately see more taxpayer-funded deflection,” Brown said in a statement.
“The ARA calls on government to focus on policies that drive down the cost of doing business in Australia, which will have a direct impact on grocery prices and the cost of living for Australian families. We need measures that reduce red tape, increase productivity or drive down costs.”
Brown called for a “sensible discussion” around the realities of running a large business in a market like Australia.
“Australian supermarkets make an enormous contribution to our communities. Collectively they employ more than 350,000 people, pay significant taxes, their shares are owned by local mum and dad investors and superannuation portfolios, and they source much of their product from our own shores,” she said.
Both Labor and the Coalition have outlined policies to address the more than $130 billion sector. Prime Minister Anthony Albanese has committed to make it illegal for supermarkets to price-gouge customers, following public and industry consultation. Laws to protect consumers from price gouging already exist in the UK, European Union and a number of US states.
Meanwhile Opposition leader Peter Dutton has taken it one step further, promising that the Coalition would enforce supermarket divestiture powers to address anti-competitive behaviour.
According to Professor Gary Mortimer, professor of marketing and consumer behaviour at the Queensland University of Technology Business School, it’s pretty disappointing the political parties have decided to focus on supermarkets “rather than the more significant and complex social and economic issues facing the Australian public”.
“When you’re a minister and you are facing issues such as youth crime, housing crisis, rental crisis, hospital ramping, a teacher shortage — those issues are significantly [more] challenging to fix — so it’s easier to apply [a] distraction strategy and focus on the price of a chocolate bar. It gets better cut through,” he said, per SBS News.
“They can certainly put legislation in place to outlaw price gouging, but if price gouging is not happening, no penalties will be awarded and it won’t actually bring prices down.”
The academic suggested key measures that will help lower prices include lower corporate tax rate, field subsidies, less red tape, less bureaucracy, and less input costs.
Among the 20 recommendations from the ACCC’s latest report to address the supermarket sector was increased transparency, such as mandated publication of price and package size information. This, it suggested, would help clamp down on shrinkflation and dodgy discounting.
It also recommended financial support for community-owned stores to improve choice and supply in remote areas.
The watchdog did not, however, back a proposal supported by the Coalition to break up major supermarkets.
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