Groceries inquiry backs breaking up major supermarkets

Andrew Brown |

A Senate inquiry is set to hand down its finding into supermarket pricing strategies.
A Senate inquiry is set to hand down its finding into supermarket pricing strategies.

Laws to break up supermarket giants that abuse their market power should be introduced, a parliamentary inquiry has recommended, while calling for measures banning price gouging at the check-out.

A Senate committee examining supermarket prices handed down its final report on Tuesday, laying out 14 reform recommendations.

The report called for divestiture laws to break up the supermarket duopoly of Coles and Woolworths, should supermarkets carry out “unconscionable conduct”.

“The supermarket duopoly in this country is operating without proper oversight and restraint, thanks to outdated and ineffectual consumer and competition law,” it said.

“Divestiture powers would be an important final step in competition regulation, to be drawn on when all else fails.”

Supermarkets and cost of living
A Senate committee examining supermarket prices has handed down its final report. (Mick Tsikas/AAP PHOTOS)

The Greens-led inquiry also called on the Albanese government to establish a price and competition commission to examine the practices of supermarkets and other industries.

Discounts across supermarkets should be standardised, along with promotional terms used to stop fake sales.

It also recommended the food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, be made mandatory by September 30, taking in codes of conduct for dairy and horticulture.

The existing code is voluntary and a separate review by former Labor minister Craig Emerson also pushed for mandatory rules.

Other recommendations included giving the consumer watchdog powers to investigate land banking, whereby supermarkets purchase land with no intention of developing it, to stop competitors using the site.

Woolworths Chief Executive Officer Brad Banducci
Brad Banducci refused to answer Senate questions about a key measure of Woolworths profitability. (HANDOUT/WOOLWORTHS)

The inquiry’s chair, Greens senator Nick McKim, said the recommendations would force large supermarkets to be fairer to customers at the check-out.

“This would mean corporations couldn’t just arbitrarily increase prices without facing consequences from the courts,” he said.

“This would be a significant new power to stop unreasonable pricing that has been rampant for years because of a lack of competition.”

While the inquiry called for measures setting up divestiture laws for supermarkets, Labor members said such changes were not needed.

Government senators Glenn Sterle and Louise Pratt said breaking up supermarkets would likely lead to unintended consequences and instead called for stronger merger laws as a way to boost competition.

The coalition said recommendations put forward were a missed opportunity.

“Australians are struggling from entrenched and increasingly homegrown inflation, and the supermarket check-out is one of the main contact points for Australians to feel the impact,” the opposition said in a dissenting report.

Greens senator Nick McKim
Greens senator Nick McKim said the recommendations would force large supermarkets to be fairer. (Mick Tsikas/AAP PHOTOS)

In a statement, Woolworths said it supported a mandatory food and grocery code of conduct and was ready and willing to co-operate.

“We will take the time to review the report and we will continue to engage constructively with the other inquiries and reviews underway,” a spokesman said.

“In the meantime, grocery inflation is coming down in our supermarkets and we continue to work hard to help customers find the best possible value, while also taking care of our team and doing the right thing with our suppliers.”

Coles was contacted for comment.

Prime Minister Anthony Albanese said increased political pressure on supermarkets had led to price reductions, promising to consider the committee’s findings.

AAP