Major retailers face possible breakups following price gouging allegations

With the cost of living constantly on the rise, consumers struggle to keep up with necessities.

In a bold move that could reshape the Australian grocery landscape, the Opposition proposed a plan that could see retail giants gone.

This controversial idea sparked a fiery debate nationwide, with shoppers, farmers, and politicians weighing in on the potential impact of such a drastic measure.


A coalition proposal to break up retail giants—Coles, Woolworths, and Bunnings—was raised should the Opposition win the next federal election.

According to Opposition Leader Peter Dutton, they would grant consumer watchdog the Australian Competition and Consumer Commission (ACCC) the power to enforce divestiture as a last resort to address anti-competitive behaviour by the major chains.

In extreme cases, the ACCC could force a supermarket to sell off parts of its business to increase market competition.


compressed-supermarkets.jpeg
Supermarket giants Coles and Woolworths could face divestiture should the Opposition's proposal pushes through. Image Credits: Shutterstock/Kym McLeod, Jane Malone


Dutton argued that this plan would not only protect customers at the checkout but also align Australia with similar powers in the United States of America and United Kingdom.

'The situation in Australia at the moment is that there's a massive concentration of market share within the two major companies, within Coles and Woolies,' Dutton said in an interview.

'There are many complaints, and validly made by consumers as well, who are worried about what it means when they go to the checkout with ever-increasing prices.'


As a safeguard, Dutton assured that measures would be put in place to prevent job losses.

For the powers to be applied, a court would have to find that divestment would result in a substantial improvement in competition and should be of public interest.

However, the Albanese Government dismissed the proposal, with Prime Minister Anthony Albanese likening it to a 'Soviet-style solution'.

Instead, the government planned to implement a mandatory Code of Conduct for how supermarkets treat suppliers, with hefty fines reaching $10 million for breaches.

Treasurer Jim Chalmers criticised the Opposition's proposal as a 'half-baked idea'.

'When it looked at this matter, it said that the risk was that it could actually make things worse, not better,' he stated.

'It found that forced divestiture resulted in a supermarket selling some of its stores to another large incumbent, or in forced closure of stores.'


The Greens, on the other hand, welcomed the push for divestiture powers.

Greens Leader Adam Bandt urged the Government to recognise the financial strain consumers are facing.

Nationals Leader David Littleproud also echoed the same sentiment, citing the disparity between the prices farmers receive for their produce and what consumers pay at checkout.

Despite these arguments, Assistant Competition Minister Andrew Leigh stated that attempts to break up the supermarkets do not make sense.

'This is a power which is rarely used in other countries. We are focused on getting measures which will benefit Australian households,' Leigh argued.


The debate over supermarket pricing and market power is not new.

In a previous article, a Greens-led inquiry into supermarket pricing previously recommended breaking up the supermarket duopoly to prevent market abuse.

The inquiry recommended amending the Competition and Consumer Act 2010 to make price gouging an offence.

However, a separate review by former Labor minister Craig Emerson advised against such a move, warning of reduced competition and job losses.
Key Takeaways

  • Opposition Leader Peter Dutton proposed using divestiture powers to address anti-competitive behaviour by major supermarket chains, should they win the next federal election.
  • The Albanese Government opposed the 'Soviet-style' plan and instead focused on imposing a mandatory code of conduct for supermarkets.
  • The Opposition's proposal aimed to help small businesses and farmers, but some experts feared divestiture could lead to less competition and job losses.
  • A Greens-led inquiry supported the idea of breaking up the supermarket duopoly to prevent market share abuse. The Nationals also called for action as both farmers and consumers face price discrepancies.
What are your thoughts on this issue? Have you felt the impact of rising prices at the checkout? Share your experiences and opinions with us in the comments section below.
 
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We could do it more easily by more people consistently not shopping at the big 2. That would send the biggest message.
Now you are talking my language.... been saying this for the past 20 years... that's how long it has been since I shopped at either of them...... all we have to do is get 12,000,000 people to do the same.
 
May not support Lib/LNP but have always thought that the Duopoly of Coles/Woolies should be broken by introducing more supermarket shops to break down this sickening control. Already shop Aldi with the one fault is they do not have all the products you want and still have to get it from the shops you don't want to shop in. LABOR had better face the realization that if they don't help people survive in life they will be removed very quickly. RobMac#
 
It doesn't matter which party wins. Either way we're all screwed.
We really need a new party party to screw us over.
 
The only difference between Liberal and Labour is the spelling. Neither party gives a hoot about the citizen they are supposedly representing. Time to get away from the 2 party system, like Dutton proposed to break up the big 2 supermarkets we could do ourselves a big favour by voting in another party such as One Nation.
Very very good point. It does a[[ear that our government parties reflect the structure of our supermarkets so maybe we should break them up in the next election!
 
Sure, everyone has felt the impact of rising prices. All the different political ways of fixing the issue reminds me of the different political ways of fixing the housing crisis yet there are 10 reasons why it can't be fixed, but this pricing issue can be.

All other countries that introduced divestiture don't really use the laws, except very rarely. So would that really do the job of stopping price gouging or stopping unfair price rises in some instances?? Sounds like it would just be a massive upheaval for many thousands of Australians with stable jobs with little positive impact upon us consumers. Furthermore, the duopoly will just push hard on lifting prices knowing any body would be loath to or scared of making the huge divestiture decision.

So, Dutton running off with his 'I'm tough, I will make the bastards hurt for your pain banner' is pure desperation popular vote political stunt stuff that won't work.

Labour don't like to take action against anything the unions might say will harm workers positions, so they may agree to an independent mandatory code of practice. But will it go far enough.

I think a set up like what the banking system has to do now, following the RC, where very high end fines have been imposed and have had a positive impact on the banks behaviour in terms of making money laundering much harder for criminals. So the point is NOT about whether I think banks are good, but more so what they sit up and take due notice of to the degree it changes their behaviour. And they have changed behaviour on this issue.

I think a code, ultimately established by an independent body, that has real teeth and the authority to fine high end multi-million if not billion $ fines on any grocery retailer granted the privilege of selling to the Australian public and proven to be price gouging or unfair pricing or unfair behaviour towards suppliers would be an improvement over what we have today, or any type of future divestiture laws. I think it would work.

It would no doubt make shareholders and the duopoly sit up, take notice and more importantly ACT in way that will not have the bad impacts upon almost all Australians it is having today.


I am aware of the very strong desire of some to inflict the level of pain that divestiture laws would bring to the duopoly, but I worry about the unintended consequences for the workers and others this would have. Dutton's or the Greens reassurances on that line leave me cold.

Given that divestiture laws are not really used by others, maybe a compromise of giving an independent body the authority to recommend or indeed approve divestiture actions against a company (as well as fines) would be the best compromise.

But will ideology once again impose itself to the detriment of most Australians.

Where oh where is the strong, calm and fair minded statesman we crave.

Free enterprise is good up to the point that greed hijacks the benefits it brings. All we have to do is manage that greed of others.
Very well written
 
The only difference between Liberal and Labour is the spelling. Neither party gives a hoot about the citizen they are supposedly representing. Time to get away from the 2 party system, like Dutton proposed to break up the big 2 supermarkets we could do ourselves a big favour by voting in another party such as One Nation.
Labor please. That’s the correct spelling.
 
I believe that it is clear Coles and Woolworths are price gouging. Government and ACCC put out lots of noise but do nothing. Both in my opinion are in bed with big business. Just look at the last ACCC fine to Qantas. $200 per effected customer. It would of cost hundreds more. It would never happen before Allan Fels was pushed out. These days they just make noise
 
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Our government sold us to the elites so they are running this show. No matter how much the prime minister is bleating on about this and that, he is with the elites who control everything. The whole world is controlled by them.
 
Here's an interesting observation by a professional who recently returned from a country that is protecting it's economy and local businesses as well. And keeping prices down to boot.

"I arrived back in Sydney yesterday morning after a five-day trip to Bali. It was great to enjoy the warm, sunny weather there.

One thing worth mentioning is how the Indonesian economy protects its local industries.

Local goods sell at a significant discount to imported goods. For example, a local Indonesian 375 mL bottle of Coca-Cola costs around 45 Australian cents in a supermarket. An imported bottle of soft drink costs around AU$2. Basically, there’s not much of a difference in the price of imported goods in Bali than in Sydney.

If you want a strong economy, making local goods more affordable is an effective way to do it. Of course, the manufacturers should get an adequate margin to keep them in business."
 

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