Extract from ABC News
With reports of the tactics Coles and Woolworths have used to increase profits at the check-out, you might have wondered what the government is doing to examine the industry.
There are half a dozen inquiries running on how the supermarket chains deal with their suppliers and customers.
Here's what they are looking at — and what, if anything, they might accomplish.
How did we get here?
If you are feeling the pinch now it's good to remember that Australians are no strangers to spikes in the cost of groceries.
A cyclone in Queensland or a drought in NSW can frequently influence how much you pay for bananas or milk.
However the profits recorded by the two biggest supermarkets in the country have led to questions on whether they are price gouging — when businesses charge prices far beyond what is considered reasonable or fair.
The act itself isn't illegal, so long as prices aren't coordinated amongst competitors.
The ABC reported this week how Coles and Woolworths have been profiting from higher prices at the check-out, despite assurances they are doing everything in their power to keep grocery bills down.
Who's involved?
The main stakeholders in all the inquiries that are either in progress or in the process of wrapping up are the major supermarkets, producers and of course, politicians.
Assistant Minister for Competition, Charities and Treasury Dr Andrew Leigh said that while no one expects supermarkets to go broke, equally, no one expects to be price gouged on their weekly shop.
He pointed to competition as the key factor that impacts costs for consumers.
Nationals leader David Littleproud said that given the high market share big supermarkets have, more competition needs to be encouraged in the sector.
He said there was clear evidence of price gouging of meat and fresh produce last year, and that the government should have initiated an ACCC investigation earlier.
Mr Littleproud added that current penalties weren't enough and should be scaled up to include divestiture powers. These powers would allow the ACCC to compel companies to reduce their control of a market.
Western Australian lamb producer David Slade said that the price of his lamb had dropped from $8 to $4.30 since last July. He doesn't consider this a fair price and credits the drop to oversupply in the lamb market.
He said that increased supermarket competition wouldn't necessarily improve farmgate prices, but it would certainly improve them for consumers.
Coles have said they are working against a challenging environment of rising costs, which affect farmers, suppliers and retailers, and impact how much consumers pay at the check-out.
So, does this mean anything for lowering the price of groceries?
When the multiple inquiries, reviews and reports eventually make recommendations it's up to the government to decide if it wants to take action.
It could legislate changes that might mean a further tightening of rules for the major supermarkets.
Unfortunately, given the time it takes for the inquiries to be completed, for governments to legislate and for the effects of legislation to reach the consumer, it's unlikely you'll be feeling the intended outcomes of these inquiries for some time.
What are the inquiries?
Six inquiries are running concurrently looking at the price of groceries and one has already happened.
- Supermarket Inquiry (ACCC)
The Australian Competition and Consumer Commission (ACCC) is the regulator that ensures businesses are playing by the rules to protect consumers from paying extortionate prices for goods and services.
It's an independent body with investigatory powers and can punish the non-compliance of businesses with fines and even prison time.
The ACCC will focus the supermarket inquiry on the assessment of competition in the supermarket industry, with a focus on how items are priced.
Its inquiry will likely result in recommendations to the government or direct agreements with supermarkets to alter behaviour that stifles competition.
The interim report is due in August and the final report is due in February 2025.
- Australian Government Food and Grocery Code of Conduct Review 2023-24 (Treasury)
The key question being considered by this government review is whether to make the food and grocery code of conduct mandatory.
The current voluntary code regulates the relationship between suppliers and Australia's supermarket chains.
A revamped, mandatory code could see the ACCC given stronger enforcement powers, with the possibility of financial penalties for non-compliance.
This theoretically should partially redress the power imbalance between farmers and supermarkets, ensuring better prices for producers.
The review is due June 30, 2024.
- The Competition Review (Treasury)
This review, being done by Treasury, is looking at competition throughout a few industries, including supermarkets.
Supermarket chain Coles has already indicated it is engaged with the review.
More competition in industries usually means lower prices for Australians so this review will provide advice to the government on how to improve it.
Reports are being handed down by the review through to August 2025.
- Select Committee on Supermarket Prices (Senate)
The Select Committee on Supermarket Prices is the closest thing we have to a debate between supermarkets and producers, with some pointing the finger at each other over the cause for high prices.
Coles and Woolworths have made submissions laying out their reasons for a rise in grocery prices.
The hearings process will consist of a cross-party committee that will have the ability to grill supermarket executives on their prices, as well as to hear from producers.
The final report is due on May 7 2024.
- Select Committee on Cost of Living (Senate)
The committee's interim report says the rise in the price of groceries is a large factor in Australia's ongoing cost-of-living crisis.
It has undertaken hearings around the country and has heard from Woolworths, Coles, Aldi and Metcash (IGA) already.
The interim findings identified "supply chain disruptions" as the major cause of the rise in grocery prices.
Its final report is due on May 31.
- Inquiry into price gouging and unfair pricing practices (ACTU)
This inquiry is the first to have been released, and its results were scathing of supermarkets in particular.
Commissioned by the Australian Council of Trade Unions and run by former ACCC chairman Allan Fels, the report was scathing of price gouging across industries, including supermarkets.
Its recommendations endorsed all government inquiry efforts.
It handed down its findings in February this year.
- Standing Committee on Economics — inquiry into promoting economic dynamism, competition and business formation
The Standing Committee on Economics is a permanent House of Representatives standing committee that decides to undertake specific inquiries into competition.
Its objectives are similar to previously mentioned competition review by the Treasury; however, it delivers a final report as opposed to taking on multiple rolling projects.
A reporting date for the inquiry hasn't been announced.
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