‘Discounts on truth in every aisle’ as Anthony Albanese announces supermarket code
Anthony Albanese has blasted the supermarket duopoly for treating customers like ‘fools’ and warned Coles and Woolworths may have exacerbated inflation, as he unveiled a crackdown on misconduct in the sector.
Anthony Albanese has blasted the supermarket duopoly for treating customers like “fools” and warned Coles and Woolworths may have exacerbated inflation during the worst cost-of-living crunch in a generation, as he unveiled a crackdown on misconduct in the food and grocery sector.
The Prime Minister will prioritise a new mandatory food and grocery code of conduct – slated to commence next April – and says he will introduce legislation by the end of the year imposing multimillion-dollar penalties against supermarket giants who breach the rules.
Reigniting the political row over supermarket competition, Mr Albanese doubled down on his criticism of the Coalition’s divestiture power as an attack on capitalism, while the opposition lamented that the government’s suite of measures was “too little too late” and questioned whether they could be legislated before the election.
Mr Albanese also took aim at Coles and Woolworths for betraying customers after the Australian Competition & Consumer Commission announced it had commenced separate Federal Court proceedings against the major grocery retailers over allegations both had been providing “illusory” discounts.
On Monday, the ACCC alleged Coles and Woolworths had imposed short-term price spikes of at least 15 per cent on tens of millions of products which had previously been sold at lower long-term prices for at least six months and, in many cases, for at least a year.
ACCC chair Gina Cass-Gottlieb said that, once the prices were increased, Coles and Woolworths then offered discounts. But she argued the new reduced prices were “actually higher than, or the same as, the previous regular price”.
The alleged misconduct involved 266 products for Woolworths at different times between September 2021 and May last year when it rolled-out its “Prices Dropped” promotion, and 245 products for Coles between February 2022 and May 2023 under its “Down Down” campaign.
In a case study provided by the ACCC, an Oreo Family Pack was sold by Woolworths between January 2021 and November 2022 at a regular price of $3.50. But it was increased to $5 on November 28 for a period of 22 days. On December 20, the product was placed on a “Prices Dropped” promotion at $4.50 compared with $5. Despite the promotion, the Oreo Family Pack was still 29 per cent dearer than the product’s previous regular price of $3.50.
Between January 2021 and October 2022, the ACCC said that Coles offered Strepsils Throat Lozenges for sale at a regular price of $5.50. This was then increased to $7 on October 12 for a period of 28 days. On November 9, the lozenges were placed on a “Down Down” promotion at $6 compared with a previous $7. Yet this was still 9 per cent dearer than the product’s previous regular price of $5.50.
Inflation in Australia peaked in the December quarter of 2022 at 7.8 per cent, during the period of the alleged misconduct. Mr Albanese on Monday suggested Coles and Woolworths could have inflamed the cost-of-living crisis.
“If this is found to be true, it’s completely unacceptable,” the Prime Minister said. “This is not the Australian spirit. Customers don’t deserve to be treated as fools by the supermarkets. They deserve much, much better than that.
“When you’re charging more for products than you should, it of course has an inflationary impact. We know that inflation is what the Reserve Bank is concentrating on in terms of monetary policy, as they should, to try to get it down to the band of 2 to 3 per cent.”
In a statement released to the stock exchange, Coles said it intended to defend the proceedings and argued the allegations related to a period of “significant cost inflation” when it was hit with a large number of cost price increases from suppliers.
“Coles’ own costs were rising, which led to an increase in the retail price of many products,” it said. “The ‘Down Down’ program is one type of promotional campaign involving a longer-term reduction in the retail price of a product.”
Woolworths Group chief executive Amanda Bardwell acknowledged the commencement of legal proceedings and said the “Prices Dropped” program was introduced to “provide our customers with great everyday value on their favourite products”.
“Cost-of-living pressures remain a key issue for millions of Australians who shop with us,” she said. “We remain committed to offering many ways for customers to save at the checkout.”
Mr Albanese said the government would introduce legislation by Christmas to amend the Competition and Consumer Act and impose higher maximum penalties for breaches of a new mandatory food and grocery code. Submissions on the draft amendments will be open until October 4.
“The legislation that we would introduce would mean that Aldi, Coles, Woolworths and Metcash would face multimillion-dollar penalties for serious breaches,” the Prime Minister said.
“Previously there’s been a voluntary code. Quite clearly, that has not been good enough.”
Mr Albanese stepped up his rejection of a new divestiture power for supermarkets, accusing Peter Dutton of teaming up with the Greens to devise new policies aimed at “breaking up capitalism”.
In June, the Coalition announced a package to deal with anti-competitive behaviour in the supermarket sector including a supermarket commissioner, infringement notices of $2m for contraventions of the code as well as divestiture powers to address “serious allegations of land banking, anti-competitive discounting, and unfairly passing costs onto suppliers”.
The introduction of a mandatory code was recommended by an independent review of harmful practices in the grocery industry conducted by former Labor minister, Craig Emerson, and released on June 24.
Opposition Treasury spokesman Angus Taylor said Labor had failed to implement its recommendations despite the report being handed down three months ago.
“The Coalition has been calling for stronger competition laws in our supermarket sector since the election, yet Labor has failed to act,” Mr Taylor said.
Nationals leader David Littleproud said the proposed code changes “don’t come into effect until April 2025 and don’t go far enough”.
Toowoomba-based Liberal MP Garth Hamilton said Australians would be outraged to learn that higher prices charged to customers were not flowing back to suppliers. “In the middle of a cost of living crisis, I would hope the ACCC would very vigorously pursue this line of investigation,” he said. “We’re certainly not going to stand by and let Australian consumers be disadvantaged by the big guys.”
Labor had previously agreed to implement all 11 of Dr Emerson’s recommendations, with Assistant Competition Minister Andrew Leigh saying the government would increase protections for suppliers through strengthened dispute resolution arrangements.
A new whistleblower “pathway” would also be created allowing suppliers to contact the ACCC anonymously to make complaints about supermarket misconduct.
Mr Albanese said the court proceedings underscored the need for a “tough consumer cop on the beat,” with the ACCC alleging that Woolworths and Coles had used the illusory discounts in the sale of “tens of millions” of products and derived “significant revenue from those sales”.
Ms Cass-Gottlieb said that “we allege these misleading claims about illusory discounts diminished the ability of consumers to make informed choices about what products to buy, and where.”
Additional reporting: Charlie Peel