Woolies and Coles committed an ‘abuse of power’: Albanese

Coles and Woolworths have breached the trust of Australians by offering illusionary discounts and acting in a way Anthony ­Albanese says constitutes an ‘abuse of power’.

Anthony Albanese. Picture: NewsWire / Martin Ollman

Coles and Woolworths have breached the trust of Australians by offering illusionary discounts and acting in a way Anthony ­Albanese says constitutes an “abuse of power”, with the Prime Minister demanding the supermarket giants “get their act ­together” or face major fines and further brand damage.

But Mr Albanese stopped short of calling for the heads of Coles and Woolworths to resign should the Federal Court rule in favour of the Australian Competition & Consumer Commission’s claim they broke the law by misleading customers. “That, of course, is a matter for their companies,” he said on Tuesday.

He would also not back a call from the Greens and Coalition to break up the Coles and Woolworths duopoly through divestiture powers, calling the idea “a bit of a cul-de-sac” that didn’t lead anywhere. “It’s a populist notion that actually isn’t practical and wouldn’t make a difference,” he told 6PR.

However, he stressed the ­supermarkets would “get a bit more than a slap on the wrist”, pointing to significant fines and “implications for their brands”.

Mr Albanese committed on Monday to introducing legislation by the end of the year that would impose multi-million-dollar penalties on supermarkets breaching the rules on a new mandatory food and grocery code of conduct.

The ACCC also announced this week it would sue the major grocery retailers over allegations they had offered “illusionary” discounts by jacking up prices for a short period before reducing them slightly to make it seem they were offering bargains. ­Nationals leader of the Senate Bridget McKenzie said Australians might never trust Woolworths and Coles again.

“Right across the board, this is a severe breach of trust. It also shows that our competition framework isn’t working for Australians,” she told the Today Show. “This is a behaviour that we’ve known has been going on for years, the Coalition’s had a strong plan on the table for months and months.”

Reserve Bank of Australia governor Michele Bullock on Tuesday also addressed accusations of price gouging by Coles and Woolworths, saying while profit margins in most sectors had not changed, it was possible “some firms might have used ­opportunities of strong demand to more than pass on any increases in costs and increase their profit margins”.

Jim Chalmers said it was crucial Australians were not “being taken for a ride by the big supermarkets”. But when asked if he believed the Woolworths and Coles chief executives should be sacked, the Treasurer said he did not want to “pre-empt” the ACCC’s legal proceedings.

Nationals leader David Littleproud warned that the fines on supermarkets needed to be sizeable, given both the Coles and Woolworths groups had multi-billion-dollar annual turnovers.

He said the Coalition would be offering an alternative vision to addressing the issue at the next election, which included fines of up to $10m and divestiture powers.

“That’s the sort of stuff that the Nationals and the Coalition have announced. And you’ll see legislation on that very soon,” he said.