Supermarket giants called to face questions over having ‘too much market power’ 

WA Today
December 3, 2023


Woolworths and Coles will be grilled about the prices they charge for groceries, with a Senate inquiry to investigate whether the supermarket giants are price gouging customers during a cost-of-living crisis.

The two major retailers have faced rising customer anger after posting profits of more than $1 billion each for the previous financial year in August, but have repeatedly denied accusations of profiteering and instead attributed higher profits to a range of issues, including internal productivity savings.

The strategies used by Woolworths and Coles to set the price of groceries will be scrutinised as part of a Senate inquiry.


The Greens have secured Labor’s support to establish the Senate probe in next week’s final sitting period of the year, and will push for the companies’ chief executives to give evidence in public hearings about their pricing practices. The first hearings are expected to be held early next year.

Allan Fels, who led the Australian Competition and Consumer Commission from 1995 to 2003, said the inquiry should consider options for beefing up government mechanisms to investigate price gouging and new powers to break up companies that abuse their market power.

“Although the number one concern of the public is cost of living and the impact of prices on incomes, there’s no actual body in the government where consumers can take their concerns about pricing. They can only go to the ACCC if there’s a technical breach of the law,” Fels said.

He said divestiture powers were a feature of competition law in other advanced economies like the United States, where they have been used to break up chemical and oil industries, but were absent from Australia’s regulatory system.

“If there were a power to get court-ordered divestiture for breaching the competition law that would hugely improve compliance, especially with regard to abuse of market power,” Fels said.

Woolworths and Coles together account for more than 60 per cent of the nation’s grocery market. The last time the ACCC conducted an investigation into the retail prices of standard groceries was in 2008.

Greens economic justice spokesman Nick McKim said the party would seek to use the inquiry to examine the impact of market concentration on food prices, with a focus on the companies’ profits amid rising costs of essential items, and the validity of discounts offered by the supermarket chains.



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“For too long the big supermarkets have had too much market power. This allows them to dictate prices and terms that are hitting people hard,” McKim said. “We want the CEOs to justify their decisions in a public hearing.”

Assistant Minister for Competition Andrew Leigh confirmed Labor would support the inquiry and said the government was already using a Treasury taskforce to identify potential reforms to competition policy to ease cost of living pressures.

“We recognise that Australians have questions about what’s driving the prices they’re paying at the cash register and these are issues where we welcome informed discussion and debate. That’s why we’re supporting this Senate inquiry,” he said.

Food and grocery inflation is at 4.8 per cent – lower than overall inflation, which is 5.4 per cent, according to the latest Australian Bureau of Statistics quarterly data.

However, the price of some grocery staples such as bread and milk is still well above inflation, while the cost of other goods such as vegetables is falling. Bread prices are up 12.6 per cent in the year to September, fish prices have risen 8.7 per cent, while dairy has increased 10.2 per cent. Vegetable prices are down 10.2 per cent and lamb is down 5.7 per cent.

A Woolworths spokesperson said the company was working with suppliers to “sensitively manage economy-wide inflationary pressures”.

“We know Australians are feeling the strain of cost of living and we are working to deliver relief in their weekly grocery shop,” the spokesperson said.

The company said it offered 6,000 specials every week and had dropped the price of all its standard lamb cuts by 20 per cent, and 400 other products for summer.

A Coles spokesperson said the company’s in-house measure of inflation was coming down and it was “always exploring ways to reduce prices on the products we sell”.

“Coles is also not immune to the increased cost of doing business – construction costs, energy prices, the cost of logistics and packaging have all risen. Our suppliers are also challenged with many of the same increases and, rightly so, we have experienced a greater volume of supplier price increase requests which we have to balance,” the spokesperson said.

Representatives from both companies have provided evidence at other parliament inquiries this year, including a Senate inquiry into the cost of living and a lower house inquiry into economic dynamism, competition and business formation.

whiteknight wrote on Dec 3^rd, 2023 at 12:24pm:


About time they did something useful.

whiteknight wrote on Dec 3^rd, 2023 at 12:24pm:



yes sir Crook,
I often watch Landline on ABC TV.
The drought has reduced feed on farms.
Some farmers were getting only $1 for a sheep and
beef prices have halved in the last 6 months yet
the supermarkets were charging top dollar for meat.
They must have made a fortune on meat and the farmers have been crucified.

greggerypeccary wrote on Dec 3^rd, 2023 at 1:30pm:



Hi Greggy,
When I see this I almost feel like becoming a cultural Marxist like all your friends.
There should be limits on how much supermarkets can profiteer.

profiteer -
make or seek to make an excessive or unfair profit.

JC Denton wrote on Dec 3^rd, 2023 at 2:38pm:


Correct.

Coles and Woolworths are in the business of making money, and there's nothing illegal about that.

If one supports capitalism, one must accept that companies will always put profit over people.

If they didn't, capitalism would collapse.

Whinge about the price of petrol, food, and shoes as much as you like but it won't change a damn thing.

Frank wrote on Dec 3^rd, 2023 at 3:19pm:


Exactly!

Frank wrote on Dec 3^rd, 2023 at 3:19pm:


fuel at coles express is higher bc of the fly buys points redemption you can get there

if you ever go there (i don't) you're supposed to use the flybuys to shave off from the real price

JC Denton wrote on Dec 3^rd, 2023 at 4:14pm:


Well, nothing to see here then.