Coles and Woolies face fresh battle to keep competitors at bay

More than 150 undeveloped supermarket sites held by Coles and Woolworths will be targeted for release to possible competitors as federal and state governments ramp up efforts to put downward pressure on food and grocery prices.

Anthony Albanese on Tuesday will reveal efforts to reform planning and zoning regulations to open up sites for new stores. The announcement comes a week after the Australian Competition and Consumer Commission started legal action against the supermarket heavyweights for allegedly pushing up prices on 511 goods before cutting them and setting prices up to 29 per cent higher than the original tags.

Coles and Woolworths have interest in more 150 potential supermarket sites. They face government action to enable competitors to develop their own sites.Credit: Asanka Ratnayake

The ACCC will receive $30 million in extra financing so it can undertake more investigations and enforcement action in the supermarket and retail sectors. The new funding will help it to monitor prices and investigate pricing practices.

In an interim report into the sector last week, the ACCC said Australia’s supermarket industry was an oligopoly, with Coles and Woolworths having expanded their number of stores and geographic coverage to now account for more than 67 per cent of national grocery sales.

It found Woolworths had interests in 110 potential supermarket sites and Coles had interests in 42 sites. By contrast, Aldi had just 13.

The competition watchdog said it would also consider the role of planning and zoning laws, which it said may slow supermarket retailers’ ability to develop new stores by creating additional costs or adding significant delays.

ACCC deputy chair Mick Keogh said it appeared planning and zoning laws may slow a retailer’s ability to develop new stores by creating extra costs or adding significant delays.

Both Coles and Woolworths said there was a range of reasons for holding property for lengthy periods of time including planning approvals, construction delays and population growth being slower than expected.

The ACCC’s final report is not due until the end of February.

But the government has decided to move quicker, and will work with the states and territories through the Council on Federal Financial Relations to reform planning and zoning regulations.

This will include land use restrictions and planning laws that act as a barrier to competition.

At a Senate inquiry into the supermarket sector earlier this year, Nationals senator Ross Cadell said there had to be “better mechanisms” to prevent land banking by the major outlets.

Albanese, who last week said the actions of Woolworths and Coles had contributed to inflation, said the government was committed to cracking down on “dodgy supermarket prices”.

“We don’t want to see ordinary Australians, families and pensioners being taken for a ride by the supermarkets, and we’re taking steps to make sure they get a fair go at the checkout,” he said.

Treasurer Jim Chalmers said the extra funding would deliver benefits to consumers.

“More funding for the ACCC will help to make pricing fair, boost competition and make sure that there are significant consequences for supermarkets who do the wrong thing,” he said.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.