ACCC to conduct inquiry on Australian supermarkets’ pricing and competition

The pricing practices of Australia’s supermarket near-duopoly are about to the the focus of a year-long enquiry by the government’s competition regulator, the Australian Competition and Consumer Commission (ACCC).

The investigation will include the pricing practices of the supermarkets and the relationship between wholesale – including farmgate and retail prices.

The ACCC will examine competition in the supermarket sector and how it has evolved since the previous inquiry in 2008. 

Moreover, the inquiry will also explore emerging issues such as online shopping, technological advancements, and loyalty programs.

“We know grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures,” says ACCC chair Gina Cass-Gottlieb.

“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 the group will use all of its legal powers to conduct a detailed examination of the supermarket sector and identify opportunities for improvement. 

“We will carefully consider what recommendations we can make to the Government,” added Cass-Gottlieb.  

Following the ACCC’s inquiry in 2008, Coles and Woolworths provided enforceable undertakings to remove restrictive tenancy provisions that may have prevented shopping centres from leasing space to competing supermarkets.

The regulator’s investigation resulted in identifying more than 700 potentially restrictive leases.

ACCC deputy chair Mick Keogh said their inquiry will examine the current environment between supermarkets, as well as barriers to greater competition and new entrants in the sector.

“Competitive markets encourage more attractive combinations of price and quality for consumers, as well as greater choice,” explains Keogh.

“We believe we are well placed to conduct this broad-ranging inquiry and will bring to bear our expertise in competition, consumer law, agriculture and the supermarket sector in particular.”

Commenting on the latest inquiry, Woolworths Group CEO Brad Banducci said the company noted the Federal Government’s decision and “welcomes the opportunity to assist” the ACCC.

“We know many Australian families are doing it tough and looking for relief at the checkout,” remarked Banducci. 

“Food inflation has continued to moderate in recent months, and we expect this to continue throughout 2024.”

The ACCC expects to publish an issues paper in February seeking views on the key issues it will consider in this inquiry.

The Australian Government will provide an interim report later this year, and the final report will be given early next year. It will also publish the formal direction from the Australian Government, including the terms of reference, when it receives it.

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