ACCC lodges submission for Senate inquiry into supermarkets as shopper complaints spike

There has been a spike in complaints landing at the competition regulator from consumers angry about high prices in supermarkets, as well as allegations of misleading advertising.

The ACCC has witnessed a strong uptick in complaints from consumers about supermarkets and high prices. Picture: iStock

The competition regulator has weighed into the political debate around the market power and pricing policies of supermarket chains Woolworths and Coles, putting in a submission to the Greens-led Senate inquiry that is calling for the introduction of an unfair trading practices prohibition and reform of current merger laws.

It comes as the regulator has also witnessed a strong uptick in complaints from consumers about supermarkets and high prices, as well as allegations of “misleading was/now advertising” of prices on food and groceries.

The Australian Competition and Consumer Commission has pushed for the introduction of an economy-wide prohibition on unfair trading practices that it believes will set an improved standard for business behaviour and promote better conduct across all markets, including the financial services sector. This would empower the competition regulator to address unfair practices in the supermarket sector and across the economy that are not currently captured by existing laws, it said.

The ACCC, which is itself conducting a review of the supermarket sector after being asked to by the Albanese government, has lodged an 18-page submission with the current Senate inquiry that will interrogate the major supermarkets over allegations of price gouging and misuse of market power.

The ACCC’s submission has also revealed that over the past several months it has been receiving “elevated levels” of contacts raising concerns about pricing practices by supermarket retailers.

“The ACCC has also seen an increase in consumers raising similar concerns across general media, social media and online forums,” the ACCC submission said.

“The reports received by the ACCC include concerns about inflation or costs of living in general, general complaints about price increases or high prices, and contacts alleging misleading price representations, including alleged misleading ‘was/now’ advertising.

“There are also allegations that in some circumstances where prices stay the same but there is a reduction in the size of the good (aka ‘shrinkflation’). These reports include consumers complaining about conduct that would not breach the Consumer and Competition Act, such as general complaints about price increases or complaints about the increase in the overall price of groceries.”

That Senate inquiry is likely to kick off its testimonies and cross examination of industry executives next month, which will include outgoing Woolworths chief executive Brad Banducci – who this week announced his intention to retire by September, and Coles boss Leah Weckert.

ACCC chair Gina Cass-Gottlieb. Picture: Aaron Francis

The Senate inquiry is flanked by the ACCC supermarkets review, led by its chair Gina Cass-Gottlieb, and follows a report commissioned by the trade union’s ACTU that was written by former ACCC boss Allan Fels, as well as a review into the code of conduct that governs the relationship between supermarkets and their food and grocery suppliers.

The intense political and community heat on the supermarkets reached new heights this week, with the broadcast of a trainwreck interview on ABC’s Four Corners program by Mr Banducci – who at one point walked out of the interview and was coaxed to come back – followed by his shock retirement announcement on Wednesday.

It comes amid a growing political storm around the perceived market power of Woolworths and Coles, and their own profitability as households struggle with higher food and grocery prices.

Late last year the Albanese government backed a push by the Greens to hold a Senate inquiry into the sector, which will include investigating allegations of price gouging.

Submissions from Woolworths, Coles, farming groups, suppliers and others have begun to be lobbed into the Senate committee with the ACCC’s submission now published.

The key push from the ACCC in its submission is around the introduction of an unfair trading practices prohibition and reforming of current merger laws as a way to improving the regulation of supermarkets, as well as other industries.

“The Australian Government announced in late 2023 the commencement of a Competition Review which included a specific focus on merger reform. The ACCC has for some time raised concerns that Australia’s current merger regime – which is based on voluntary notification, an informal review process, and an enforcement-based model – should be made more fit-for-purpose,” it said.

One feature that the ACCC has proposed in its submission, that has particular relevance to the supermarket sector, is the inclusion of necessary tools to deal with “serial acquisitions”. It is these creeping acquisitions that have seen Woolworths and Coles buy up other related retail businesses and strengthen their market power base.

“Under the proposal, the ACCC would be the first instance decision maker, with review by the tribunal available to merger parties and third parties. Merger parties would be required to notify the ACCC of mergers that meet clear, certain and objective thresholds for notification; and not to complete the transaction without ACCC or tribunal approval, or unless the ACCC grants a ‘fast-track waiver’ from the full notification and approval requirements.”

The ACCC is also calling on the voluntary food and grocery code of conduct between the supermarkets and suppliers be made mandatory to make it more effective.

“The voluntary nature of the code and ability to withdraw at any time can undermine its effectiveness. It is the ACCC’s longstanding view that the code should be mandatory. This does not necessarily mean expanding the coverage to include all grocery retailers and wholesalers. The scope of the code could be limited by turnover, the number of employees or another method to limit traders covered by it.”