Is your grocery bill getting out of hand? Here’s what the ACCC can and can’t do for shoppers!
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In response to growing concerns over the rising cost of groceries, Prime Minister Anthony Albanese has announced a 12-month price inquiry into the supermarket industry by the Australian Competition and Consumer Commission (ACCC).
This comes in addition to a federal senate inquiry and a review of the code of conduct already in progress.
But what does this mean for the average Australian consumer? Let's delve into the details.
During his speech at the National Press Club, PM Albanese announced that the ACCC would be directed to conduct a year-long price inquiry into the supermarket industry.
This decision follows public calls for the consumer watchdog to investigate the issue.
In addition to the ACCC inquiry, the advocacy group CHOICE will receive funding to 'provide clear regular information on prices across a basket of goods'.
The Scope of the Inquiry
The ACCC's inquiry will utilise its compulsory information-gathering powers to investigate the practices of major supermarkets, including ALDI, Coles, and Woolworths.
The investigation will focus on:
- The relationship between wholesale, farmgate, and retail prices
- Barriers to greater competition in the sector
- The challenges faced by other companies trying to enter the market
- The impacts of online shopping, loyalty programs, and changes in technology on competition
ACCC Chair Gina Cass-Gottlieb stated, 'When it comes to fresh produce, we understand that many farmers are concerned about the weak correlation between the price they receive for their produce and the price consumers pay at the checkout.'
'We will use our full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to [the] government,' she added.
The ACCC will provide an interim report to the federal government later this year, with the final report due early next year.
What Can the ACCC Do?
While the ACCC cannot directly change prices, it can take supermarkets to court if they are found to be breaking the laws in the Competition and Consumer Act. It can also pressure supermarkets to enter agreements about their operational practices.
The last ACCC inquiry of this nature in 2008 resulted in an agreement with Coles and Woolworths to phase out restrictive provisions in supermarket leases.
This was after the inquiry identified practices that potentially limited competition by preventing shopping centre managers from leasing space to competing supermarkets.
Understanding Supermarket Pricing
While high prices or sudden increases in price are not illegal, the ACCC pointed out on their website that 'the business's behaviour around setting prices may be illegal if it harms competition in a certain way'.
'It's also illegal for businesses to make false or misleading claims about prices, including the reason for any changes in prices.'
The ACCC identified several 'anti-competitive pricing' behaviours, including minimum resale prices, predatory pricing, and price fixing.
However, the ACCC also noted that just because prices are the same at different businesses, it doesn't necessarily mean they colluded with each other.
'Sometimes, businesses independently change their prices to match their competitors' prices.'
'This can create price changes that may look like price fixing.'
'However, this is unlikely to be illegal as long as each business is making independent decisions about its prices.'
Other Measures to Address Supermarket Prices
In addition to the ACCC inquiry, a federal Senate inquiry is currently investigating the 'price-setting practices and market power of major supermarkets'.
An independent review of the Food and Grocery Code and Conduct is also underway, looking at whether the code should be changed, including whether it should be made mandatory or include civil penalty provisions.
The independent review will be carried out by former Labor MP Craig Emerson, with a report to be prepared by June 30.
The Supermarkets' Response
Both Woolworths and Coles have welcomed the ACCC inquiry.
Woolworths Group CEO Brad Banducci said the company looked forward to assisting the ACCC with its inquiry, while Coles stated it was 'working hard to keep groceries affordable for Australian households and families'.
Meanwhile, a spokesperson from Coles said: '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 check-out.'
'We have worked closely with the ACCC in previous inquiries, and we will do so again. We welcome the ACCC's examination of the factors that affect prices in the grocery supply chain and look forward to illustrating how we provide value to our customers and our positive relationships with our supplier partners.'
'Millions of Australians carefully consider and compare our prices every day when they shop at Coles. We welcome CHOICE into our stores to do the same, as well as continue their regular reviews of our products and services,’ they added.
Members, have you also noticed a significant increase in your grocery bill? Let us know in the comments below!
This comes in addition to a federal senate inquiry and a review of the code of conduct already in progress.
But what does this mean for the average Australian consumer? Let's delve into the details.
During his speech at the National Press Club, PM Albanese announced that the ACCC would be directed to conduct a year-long price inquiry into the supermarket industry.
This decision follows public calls for the consumer watchdog to investigate the issue.
Prime Minister Anthony Albanese has instructed the ACCC to conduct a thorough investigation into the supermarket industry. Image source: Shutterstock.
In addition to the ACCC inquiry, the advocacy group CHOICE will receive funding to 'provide clear regular information on prices across a basket of goods'.
The Scope of the Inquiry
The ACCC's inquiry will utilise its compulsory information-gathering powers to investigate the practices of major supermarkets, including ALDI, Coles, and Woolworths.
The investigation will focus on:
- The relationship between wholesale, farmgate, and retail prices
- Barriers to greater competition in the sector
- The challenges faced by other companies trying to enter the market
- The impacts of online shopping, loyalty programs, and changes in technology on competition
ACCC Chair Gina Cass-Gottlieb stated, 'When it comes to fresh produce, we understand that many farmers are concerned about the weak correlation between the price they receive for their produce and the price consumers pay at the checkout.'
'We will use our full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to [the] government,' she added.
The ACCC will provide an interim report to the federal government later this year, with the final report due early next year.
What Can the ACCC Do?
While the ACCC cannot directly change prices, it can take supermarkets to court if they are found to be breaking the laws in the Competition and Consumer Act. It can also pressure supermarkets to enter agreements about their operational practices.
The last ACCC inquiry of this nature in 2008 resulted in an agreement with Coles and Woolworths to phase out restrictive provisions in supermarket leases.
This was after the inquiry identified practices that potentially limited competition by preventing shopping centre managers from leasing space to competing supermarkets.
Understanding Supermarket Pricing
While high prices or sudden increases in price are not illegal, the ACCC pointed out on their website that 'the business's behaviour around setting prices may be illegal if it harms competition in a certain way'.
'It's also illegal for businesses to make false or misleading claims about prices, including the reason for any changes in prices.'
The ACCC identified several 'anti-competitive pricing' behaviours, including minimum resale prices, predatory pricing, and price fixing.
However, the ACCC also noted that just because prices are the same at different businesses, it doesn't necessarily mean they colluded with each other.
'Sometimes, businesses independently change their prices to match their competitors' prices.'
'This can create price changes that may look like price fixing.'
'However, this is unlikely to be illegal as long as each business is making independent decisions about its prices.'
Other Measures to Address Supermarket Prices
In addition to the ACCC inquiry, a federal Senate inquiry is currently investigating the 'price-setting practices and market power of major supermarkets'.
An independent review of the Food and Grocery Code and Conduct is also underway, looking at whether the code should be changed, including whether it should be made mandatory or include civil penalty provisions.
The independent review will be carried out by former Labor MP Craig Emerson, with a report to be prepared by June 30.
The Supermarkets' Response
Both Woolworths and Coles have welcomed the ACCC inquiry.
Woolworths Group CEO Brad Banducci said the company looked forward to assisting the ACCC with its inquiry, while Coles stated it was 'working hard to keep groceries affordable for Australian households and families'.
Meanwhile, a spokesperson from Coles said: '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 check-out.'
'We have worked closely with the ACCC in previous inquiries, and we will do so again. We welcome the ACCC's examination of the factors that affect prices in the grocery supply chain and look forward to illustrating how we provide value to our customers and our positive relationships with our supplier partners.'
'Millions of Australians carefully consider and compare our prices every day when they shop at Coles. We welcome CHOICE into our stores to do the same, as well as continue their regular reviews of our products and services,’ they added.
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