Consumers will be given added protection from price-gouging at the checkout, but Australia’s major supermarkets have a six-month reprieve before the laws kick in.
The federal government has introduced rules to limit “excessive pricing of groceries” with changes to Australia’s Food and Grocery Code of Conduct, which was made mandatory in April.
The move against price-gouging – foreshadowed before a snap consultation period earlier in the year – takes effect on July 1.
The ban will prohibit very large retailers from charging prices that are excessive when compared to the cost of the supply, plus a reasonable margin, the government said on Sunday.
In March, the Australian Competition and Consumer Commission found the near-duopoly enjoyed by Coles and Woolworths gave them little incentive to compete vigorously, noting they were among the most profitable supermarkets in the world.
But the report never directly accused the supermarkets of gouging customers, something both Coles and Woolworths have consistently denied.
It did not make a finding on, or seek to define whether supermarket prices were “excessive”, since high margins are not prohibited under consumer laws.
From July, supermarkets could face fines of $10 million per breach, three times the value of the benefit derived or 10 per cent of the company’s turnover during the preceding 12 months.
The commission will be responsible for policing the new regime.
Treasurer Jim Chalmers said the changes gave the competition watchdog the powers it needed to hold supermarkets to account.
“One of the best ways to ease the cost of living for Australians is to help people get fairer prices at the checkout and that’s what this is all about,” he said in a joint statement.
The consumer watchdog’s report found grocery prices rose at more than double the rate of wages between late 2022 and early 2023, attributing at least some of those rises to additional profits for Coles, Woolworths and Aldi.
While it acknowledged the costs of doing business had risen, the supermarkets had increased their profit margins despite the disruption to supply chains caused by the COVID-19 pandemic, the report said.
Aldi’s growth had acted as a handbrake on the duopoly, but the commission noted the German discount chain did not compete directly with them on all product lines.
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