Woolies and Coles to face ACCC probe on prices

The Albanese government has directed the consumer watchdog to conduct a 12-month price inquiry into the supermarket industry – which is under pressure over price gouging.

Anthony Albanese addresses the National Press Club in Canberra on Thursday. Picture: NCA NewsWire / Martin Ollman

The Labor government has directed the consumer watchdog to conduct a 12-month inquiry into the supermarket industry under pressure over price gouging as it seeks to win over voters after breaking its promise to carry through stage three tax cuts.

Amid ongoing claims of anti-competitive behaviour by the supermarkets, as retail prices continue to outpace wholesale costs even as inflation slows, the Albanese government will also set up a FuelWatch-like website to compare the prices of thousands of supermarket items.

Announcing the first probe into supermarket pricing since 2008, Mr Albanese said the inquiry would examine pricing practices of the supermarkets and the relationship between wholesale prices – including farmgate – and retail prices.

“The ACCC has significant powers and it is the best and most effective body to investigate supermarket prices,” Mr Albanese said. “For me, it’s this simple. When farmers are selling their product for less, supermarkets should charge Australians less.

“These actions send a very clear message – our government is prepared to take action to make sure that Australians are not paying one dollar more than they should for the things they need.”

The probe will also look at how online shopping, loyalty programs and technology changes are impacting competition in the industry.

Coles on Wednesday defended its grocery pricing but said it would co-operate with the ACCC to undertake its year-long inquiry.

“We are working hard to keep groceries affordable for Australian households and families, especially as they face escalating living costs with higher mortgages and rents and increasing expenses like energy and fuel,” the company said in a statement.

“We are doing this against a challenging environment of high inflation, with rising costs that affect the whole economy including farmers, suppliers and retailers, and impact the prices customers pay at the checkout.”

Nationals leader David Littleproud claimed Labor had been “shamed” into calling the inquiry after ignoring warnings to act for more than 12 months, and said its delay in responding to soaring food prices was proof the government did not understand how much consumers were struggling to pay their bills.

The Nationals had urged the government to call the inquiry last November following evidence of price disparity in fresh food between the farmgate and check-outs.

“While Labor spent last year distracted on a $450m failed voice referendum, price disparity between the farmgate and the supermarket checkout was allowed to escalate out of control,” Mr Littleproud said.

Farmers welcomed the ACCC probe and called on the Albanese government to commit to act on its recommendations.

“We’ve seen past reports collect dust on shelves in Canberra. Reports and recommendations don’t make our food system fairer. We need sustained political leadership and action,” National Farmers Federation president David Jochinke said.

The last price inquiry into the supermarkets, during the Rudd government, did not reveal price gouging. It did, however, expose barriers to competition, including exclusive agreements between Coles or Woolworths with shopping centre owners that prevented other supermarkets from also renting space in those buildings.

The union movement welcomed the inquiry, warning working people had been “rorted by the supermarket duopoly”.

“The Albanese government’s establishment of an ACCC inquiry is an opportunity to examine how the major supermarkets are setting prices and the extent to which ordinary Aussies are being ripped off at the checkout,” ACTU assistant secretary Joseph Mitchell said.