‘Flaccid’ crackdown lashed, after govt rejects supermarkets break-up
Opposition senators are piling on the pressure after the government again rejected calls to break up big supermarkets, following a damning report.
The Australian Competition and Consumer Commission found their large market share meant the major chains had little incentive to be competitive on pricing.
In its final report into the sector, released on Friday, the consumer watchdog said Coles, Woolworths and Aldi faced little competition and had increased their average product margins in the past five years. But it stopped short of accusing them of price gouging.
Treasurer Jim Chalmers said the government accepted in principle all 20 of the report’s recommendations, and was already taking substantial steps in most areas.
Others would take long lead times and require consultation – meaning it may be a while before consumers notice the changes in their daily shop.
The ACCC noted that Coles and Woolworths were two of the world’s most powerful and profitable supermarkets. It did not, however, back a Coalition proposal to break up major supermarkets.
Its 441-page report said there was no “silver bullet”, delivering a suite of recommendations to address issues including barriers for new entrants, supermarkets’ power imbalance over suppliers and lack of choice in remote locations.
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It recommended increased transparency, such as mandated publication of price and package size information, to help clamp down on shrinkflation and dodgy discounting.
Chalmers said the risk of divesting supermarket chains outweighed the benefits.
“If you make one of the big chains sell in the community, there’s a risk that it’s just snapped up by the other big player in the supermarket sector and that would be counterproductive,” he told ABC TV.
“Or if it chases supermarket options out of town in regional communities — it’s got hairs all over it, frankly.”
Nationals senator Bridget McKenzie said the report was a “flaccid” response from the government to address cost-of-living concerns.
“We put a very comprehensive proposal on the table to address the lack of competition in our supermarket sector that the government failed to pick up,” she told Sky News.
“I didn’t hear the word penalties. I didn’t hear any tough measures that are actually going to put a very strong incentive for our supermarkets to behave better.
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“They haven’t actually taken a big stick to it.”
Greens senator Nick McKim said divestiture powers would be “the final tool in the toolkit for regulators”.
“So that when markets are too concentrated and they are leading to poor outcomes for consumers … they can be broken up when necessary,” he said.
As part of the Albanese government’s response to the ACCC findings, Tuesday’s federal budget will include $2.9 million over three years to help educate suppliers on how to stand up to the supermarkets.
“Cracking down on the supermarkets is all about getting a fair go for families at the checkout and farmers at the farm gate,” Chalmers said.
“Even with the progress that we’ve been making on inflation, we know that people are still under the pump, and we know that the weekly trip to the supermarket can be a source of that pressure.”
Coles and Woolworths have vigorously rejected claims of price gouging, arguing their preferred profitability metrics showed their margins are comparable to their peers in countries like Canada, Britain and the US.
“Coles believes Australia’s grocery sector is highly competitive, is evolving rapidly, and offers consumers greater choice than ever before,” the big retailer said.
It also warned against measures that would “increase red tape and drive up costs”.
Woolworths CEO Amanda Bardwell welcomed recommendations that improved transparency for customers, “where they don’t have unintended consequences”.
Bran Black, chief executive of the Business Council of Australia, said it was a good thing the supermarkets were profitable because they supported jobs, paid taxes and their shares were in most people’s superannuation accounts.
