New rules proposed to protect shoppers and suppliers
The Australian Competition and Consumer Commission (ACCC) has recommended sweeping reforms to the supermarket sector, aiming to improve competition, enhance price transparency, and provide better conditions for both consumers and suppliers.
Following an extensive inquiry, the ACCC has made 20 recommendations targeting the dominance of major supermarket chains ALDI, Coles, and Woolworths. The report found that these retailers are among the most profitable supermarket businesses globally and that their average product margins have increased over the past five financial years.
“In the past 12 months the ACCC has heard from more than 20,000 consumers who responded to our consumer survey, received more than 100 public submissions, held eight supplier roundtables, reviewed tens of thousands of internal documents, conducted private hearings and 10 days of public hearings, and analysed billions of points of supermarket data,” said ACCC deputy chair Mick Keogh.
“There is no ‘silver bullet’ that will address all the issues we have identified in the supermarket sector, but we are confident that our recommendations will make a difference.”
Among the key recommendations is the requirement for supermarkets to publish pricing data online and enable third-party price comparison tools. This is expected to encourage competition by allowing consumers to make more informed purchasing decisions.
The report also identified significant barriers preventing new or smaller supermarkets from entering and expanding in the market.
“Currently, the availability of suitable retail sites is limited by planning and zoning laws,” Keogh said. “We are recommending that all levels of government simplify and harmonise planning and zoning requirements to make it easier to establish new supermarkets.”
The ACCC is also pushing for stricter oversight on acquisitions by Coles and Woolworths. The two supermarket giants have acquired around 260 retail sites since 2019, with the ACCC only being notified of 14.
New merger laws and additional notification requirements are expected to strengthen the ACCC’s ability to scrutinise acquisitions, prevent further market consolidation, and ensure fair competition.
Another key focus is improving transparency on pricing, promotions, and loyalty programs. The ACCC is recommending that supermarkets be required to notify customers of price increases, including ‘shrinkflation’—when product sizes shrink while prices remain the same or increase.
In regional and remote areas, where supermarket prices tend to be higher due to freight costs and limited competition, the ACCC is calling for improved price transparency and better complaint-handling mechanisms. Additionally, ACCC said it supports government-backed community-owned stores to provide more options for remote consumers.
The inquiry found a power imbalance between major supermarkets and their suppliers, particularly in fresh produce. To address this, the ACCC is recommending that supermarkets provide greater transparency in their weekly tendering process and supply forecasts.
“Many suppliers fear retribution from raising concerns directly with the major supermarkets,” Keogh said. “We found that suppliers need more information and protections.”
The ACCC has also proposed amendments to the Food and Grocery Code to strengthen supplier protections and ensure fair negotiations.
