TRANSCRIPT
In 2024, a survey by Finder - a price comparison site, found that two in five Australians felt their grocery bill was their most stressful expense.
With data showing that grocery costs have risen by about 24 per cent in the last five years, the ACCC has addressed the issue with a new report; the first into the sector in 17 years.
The report found Coles and Woolworths are among the most profitable supermarkets in the world.
According to the findings, Coles and Woolworths are so powerful they no longer have an incentive to compete on pricing.
With Woolworths controlling 38 per cent of national grocery sales and Coles controlling 29 per cent, the report says the pair are running an 'oligopoly', whereby a small number of sellers control prices at a cost of consumers and competition.
Assistant Minister for Competition, Andrew Leigh, says the report makes for grim reading.
"Over the last seventeen years, products like kombucha and kale have hit the shelves, but unfortunately, we haven't seen a whole lot more competition in the grocery sector, and indeed, this report reveals that the market share of the big two supermarkets has increased over that period. It's seen the entry of Aldi, but the shrinking of Metcash. The report makes very clear that Australia's supermarkets are among the most profitable in the world."
While stopping short of accusing the supermarkets of breaking any consumer laws, the report makes 20 recommendations for reform.
The Federal Government, which received the report three weeks ago, says it has agreed in principle to all 20 of the recommended measures.
Mr Leigh says some of the recommendations are already being put into action.
"Shrink-flation, sneaky prices, unfair deals - we're tackling those head on. We are working hard to secure a fairer deal for farmers and a fairer deal for families. We understand that it is critical that supermarkets do the right thing. We are holding them to account with our existing reforms and through our in-principal adoption of this important new ACCC report."
Among the key recommendations is forcing major supermarkets to publish all product prices on their websites, allowing online comparison tools to access the data to inform shoppers.
The move is also designed to provide more transparency in their negotiations with fresh produce suppliers.
Speaking to Nine's Today Show, National President of the Labor, Party Wayne Swan, says without transparency, nothing is stopping unfair pricing practices.
"It shows what every consumer knew back at the end of 2020/2023, that they were price gouging. And now the government has to put in place a whole set of rules and regulations and scrutiny, which can ensure that this never happens again in this way. "
During the 12-month inquiry, the country’s major grocery retailers consistently defended their pricing decisions against price-gouging allegations.
In a response to the ACCC report, Coles says it welcomes greater transparency but has warned against measures it says may increase red tape and drive-up costs.
Woolworths CEO Amanda Bardwell has welcomed recommendations that improved transparency for customers, but also warns they shouldn't have "unintended consequences".
Bea Sherwood is the Senior Campaigns and Policy Advisor for consumer advocacy group Choice.
She told SBS that if regulations mean greater costs, they should be absorbed by the major retailers and not consumers.
"That's a really interesting statement from Coles, I think what this ACCC report has revealed is that the major supermarkets are profiting, and they're not passing on any potential savings onto consumers. So, if there is a risk of increased costs, I would say that that is hopefully a cost the supermarkets can absorb."
For consumers, ACCC Deputy Chair Mick Keogh says recommendations have been made to improve clarity and transparency about supermarket loyalty programs and deal promotions.
"Consumers told us very clearly that they find pricing, promotion and loyalty programs, very confusing and very difficult for them to work out what's good value. So, we make a number of recommendations we think we'll improve that. "
The report states that for people living in rural and remote parts of Australia, there are even fewer choices when it comes to grocery shopping.
Mr Keogh says this means grocery costs in remote communities are even higher.
"They certainly are in a situation where there is limited competition, and that means their prices are higher. Now that is, of course, needs to recognize that transport costs and the distribution costs associated with regional and remote locations are much higher. So, we've made some recommendations to the government about ways they could offset some of those additional costs in some of those regional areas and make food a bit more affordable."
Also in the report, the regulator details how suppliers often feel pressured to accept whatever price the supermarket offers.
Often the supplier’s sole buyer, the report says Coles and Woolworths can use their monopoly purchasing power to suppress prices and reduce production, meaning higher prices and reduced choices for consumers.
Treasurer Jim Chalmers says as part of the initial response, Tuesday's budget will include $2.9 million in funding over three years to help educate suppliers on their rights when dealing with supermarkets.
"We want to make sure that when supermarkets are negotiating with our farmers, that we can strengthen the arguments and strengthen the arm of the people who produce our food, and that's what this funding is all about. Now, organizations will always want more funding, we understand that we're realistic about that. But this is a new investment, it's also not the only thing that we're doing to empower farmers and suppliers, making the food and grocery code mandatory the big penalties that Andrew talked about all of this is part of the story as well."
The report says Coles and Woolworths’ dominance is likely to continue given their dominant share of sales in the supermarket sector, which is jointly 67 per cent.
Bea Sherwood says it's crucial that supermarkets are made to be completely transparent with consumers.
"It's clear that the supermarkets are going to set whatever prices that they like to set and that they're not passing on their savings to consumers. So, where we can, improving that price transparency and improving how prices are displayed are going to be really important and crucial parts of getting this right."
