Assistant Minister for Competition Andrew Leigh has released draft legislation to stop supermarkets ripping off customers. Photo: Michelle Kroll.
The big supermarket chains could face fines of up to $10 million if they pursue price-gouging tactics aimed at ripping off customers.
Draft legislation to combat Woolworths and Coles colluding over prices and price-gouging has been released, and the Federal Government wants to know what you think about it.
Assistant Minister for Competition Andrew Leigh says the proposed changes to the law are long overdue.
“We’re putting in place a system that will punish supermarkets who do the wrong thing,” Dr Leigh said.
“Excessive pricing rules will be judged by courts using information such as the cost of supply plus a reasonable mark-up, or comparisons with prices in competitive jurisdictions.
“We know many Australians are feeling under pressure from the cost of the weekly shop, and our price gouging laws will make sure we look after consumers.”
The legislation is based on models in the United Kingdom and the European Union.
Australians can have their say with the exposure draft legislation open for submissions until 3 November.
The reforms aim to address a core finding by the Australian Competition and Consumer Commission (ACCC) in its supermarkets inquiry that there are significant barriers to entry in the supermarkets sector and that Coles and Woolworths have limited incentive to compete on price.
The ACCC further found Australia’s major supermarkets to be among the most profitable supermarket businesses globally.
Dr Leigh said the new law will help safeguard consumers against the risk that major supermarkets charge excessive prices, enabled by their entrenched positions in the market.
Supermarkets that breach these new laws can face up to multi-million-dollar penalties.
The ACCC will be responsible for enforcing the prohibition and will be provided with another significant tool to protect consumers in their weekly shop.
“This builds on other action the government is taking to foster a competitive and sustainable supermarket sector, including making the Food and Grocery Code mandatory from 1 April 2025,” the Assistant Minister said.
The government has also increased the ACCC’s funding by more than $30 million to address harmful or misleading conduct in the supermarket and retail sectors.
It is currently consulting on options to strengthen the Unit Pricing Code, including tackling shrinkflation, and it has committed to implement the ACCC’s recommendations to improve transparency about prices, price trends, promotions and loyalty programs in the sector.
The ACCC will be notified of supermarket sector acquisitions by Coles and Woolworths to scrutinise land acquisitions under reforms to merger laws.
And it will become easier for supermarkets to enter the market and expand with incentives for the states to cut commercial planning and zoning red tape under the revitalised National Competition Policy.
The government is also directly asking suppliers to Australia’s largest supermarket chains to update their experiences dealing with the corporate giants since the new mandatory code of conduct came into effect.
It specifically targets interactions between suppliers and Coles, Woolworths, Aldi and wholesaler Metcash.
Suppliers can have their say on the Food and Grocery Code Supervisor’s website.
The Food and Grocery Code Supervisor’s annual survey monitors relationships between suppliers and the large grocery businesses to identify emerging issues and assess compliance with the code.
The supervisor reviews how suppliers’ complaints are handled under the code.
The suppliers’ survey helps identify emerging and systemic issues in the grocery supply chain from the previous financial year.
It will also help identify whether any suppliers feared retribution from large grocery businesses and assess suppliers’ experiences with large grocery businesses contracting out of certain obligations.
