Are supermarkets charging too much? New rules could change that

Are you feeling the pinch at the checkout? You’re not alone.

With the cost of living rising and grocery bills climbing ever higher, many Australians are asking: are we being charged too much for our weekly shop?

The federal government thinks it’s time for answers and action.

Cracking down on price gouging: What’s changing?

In a move that could shake up the supermarket aisles, the Albanese government is proposing tough new rules to stamp out 'excessive pricing', or, as most of us call it, price gouging.

The proposed new laws, expected to roll out by the end of the year, are inspired by similar regulations in the United Kingdom and European Union.

The aim is to make sure big supermarkets like Coles and Woolworths play fair and give shoppers a better deal.

Assistant competition minister Andrew Leigh didn’t mince words when he announced the plan.

'The fines are $10m, three times the ill-gotten gains, or up to 10 per cent of the turnover,' Leigh said.

For companies with billions in revenue, that’s a serious deterrent.

Who’s in the firing line?

The new rules will target companies with more than $30 billion in turnover, so yes, Coles and Woolworths are firmly in the spotlight.

These two supermarket giants control a whopping two-thirds of Australia’s grocery market, and their profits have been under scrutiny for years.

But it’s not just about punishing the big players.

The proposed legislation could see major retailers fined millions for price gouging. Image Source: hidesy / Shutterstock

Leigh insists the laws are about 'transparency and enforcement', ensuring that ‘supermarkets who do the right thing’ have nothing to fear under the newly introduced Food and Grocery Code of Conduct.

The goal is to give consumers a 'fair deal at the checkout', not to wage war on the industry.

How will it work?

If a supermarket is suspected of price gouging, courts will look at a range of evidence.

This includes the cost of supply, whether there’s been a loss of reasonable mark-up, and how prices compare to those in more competitive markets.

If found guilty, the penalties could be eye-watering.

Right now, the penalty for price gouging is nothing. That’s about to change.

'The penalty for price gouging right now is zero. We’re putting in place a system which will punish supermarkets that do the wrong thing with multi million dollar fines,' Leigh said.

Industry pushback: Are supermarkets really to blame?

Not everyone is convinced the new rules will help.

Chris Rodwell, chief executive officer of the Australian Retailers Association, says the industry is already tightly regulated and that adding more red tape is unlikely to bring prices down.

He points out that 'eight taxpayer-funded reports fail to find evidence of price gouging', adding that grocery inflation in Australia remains lower than in many other developed nations.

Coles, for its part, says the focus should be on the real drivers of higher prices.

A history of scrutiny and profits

This isn’t the first time Coles and Woolworths have come under the microscope.

Earlier this year, an Australian Competition and Consumer Commission (ACCC) inquiry found that the two chains are among the most profitable supermarkets in the world.

In the 2024-2025 financial year, Coles reported $1.08 billion in profit, while Woolworths raked in $1.4 billion.

Yet, despite their dominance, the consumer watchdog couldn’t find conclusive evidence of price gouging.

More competition on the horizon?

The government’s crackdown comes hot on the heels of prime minister Anthony Albanese’s call for more competition in the sector.

He even suggested that international supermarket giant Lulu, an Emirati hypermarket chain, should set up shop in Australia to give Coles and Woolworths a run for their money.

'We need more competition in the Australian supermarket sector, and we’ve had a little discussion about that as I’ve been walking around,' the prime minister said.

Many Australians would welcome a new player to shake things up.