Dutton to supermarkets: Rein in prices, or we’ll force you to sell stores

Supermarket and hardware giants could be forced to sell stores if they keep prices too high under a “big stick” policy designed to sharpen Peter Dutton’s attack on Labor’s handling of the inflation outbreak.

As this masthead reported in March, the opposition has spent months working on laws aimed at reducing the market powers of supermarket giants Coles and Woolworths.

Peter Dutton negotiated the plan with Nationals leader David Littleproud and shadow treasurer Angus Taylor.Credit: Alex Ellinghausen

Labor announced last month a new code of conduct and billion-dollar fines for supermarkets accused of price gouging, but the Coalition has taken the crackdown a further step by revealing break-up laws.

“We want cheaper prices at the checkout, and Mr Albanese has yet again demonstrated a complete lack of leadership, a weakness in leadership, an inability to stand up to these companies, and we’re prepared to do that,” Dutton said at a Canberra press conference.

Grocery prices have been prominent in the cost-of-living debate, prompting the Coalition to adopt a contentious interventionist policy opposed by key business lobby groups.

Long-time Australian Competition and Consumer Commission chair Allan Fels said he and other consumer advocates had been spruiking divestiture laws for decades, marking the Coalition’s announcement as a historic moment and giving credit to the Nationals and Greens for putting it on the political agenda last year.

The laws could act as a major deterrent against anticompetitive conduct, he claimed, and divestiture laws had led to more dynamic and job-creating markets in the United States and other countries with economy-wide rather than sector-specific break-up powers.

“I applaud this step. It will ultimately be seen as a historic move towards the adoption of a discovery law that applies to all big business. This is normal in other countries. Australia is the unusual one,” Fels said.

National Party leader David Littleproud argued the laws should be seen mostly as a deterrent. “This isn’t about fixing prices, and it won’t mean that tomorrow or when we get into government, that we’re going to break up the supermarkets straight away,” he said.

Littleproud said a Coalition government would create a new supermarket commissioner to deal with complaints, though he did not explain how it would be possible to increase farmer revenue while bringing down prices for shoppers.

The Coalition said they wanted the laws to act as a deterrent against price gouging. Credit: Sam Mooy

To quell the anxiety of business groups, shadow treasurer Angus Taylor said a court would need to be satisfied that divesting an asset would increase competition and be in the public interest.

“We have a retail sector, a grocery sector, that’s highly concentrated. Much more concentrated than peer countries like the US and the UK,” Taylor said.

“We are also unusual in that we don’t have a broad-ranging divestment power attached to the offences in our Consumer and Competition Act. In the US and the UK, those powers are there.”

The release of one of the Coalition’s first substantive economic policies heightens the political contest over grocery costs and demonstrates the Coalition’s growing ambivalence about backing corporate Australia.

The policy is a big win for the Nationals and influential right-wing backbenchers who pushed for the ability to break up supermarket and hardware chains to create more competition.

Taylor developed similar laws for the energy market when the Coalition was in government, giving some nervous Liberals confidence that the interventionist approach would not cause too much market disruption.

Prime Minister Anthony Albanese has described break-up laws as belonging in the old Soviet Union.

Australian Competition and Consumer Committee chair Gina Cass-Gottlieb indicated to a Senate estimates committee last May she would support giving the Federal Court divestiture powers.

Supermarket executives have repeatedly denied the charge of price gouging and claimed higher production costs were leading to higher store prices.

The National Farmers’ Federation and the Business Council of Australia are opposed to forced break-up laws.

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