Uncategorized

The ACCC will be investigating supermarket pricing. Here’s what the watchdog can and can’t do


Prime Minister Anthony Albanese has announced another investigation into supermarket prices, amid growing concerns over the cost of groceries.

This is on top of a federal senate inquiry and the code of conduct review that’s already underway. 

Here’s what it means. 

What did the PM announce today?

Mr Albanese said the Australian Competition and Consumer Commission (ACCC) would be directed to do a 12-month price inquiry into the supermarket industry. 

This came after calls for the consumer watchdog to look into the issue. 

The prime minister announced the ACCC inquiry during his speech at the National Press Club, an address that focused mainly on his government’s proposed changes to the stage 3 tax cuts. 

Mr Albanese also said advocacy group Choice would be getting funding to “provide clear regular information on prices across a basket of goods”.

What will inquiry this do?

Launching an inquiry allows ACCC to use compulsory information-gathering powers on all the relevant parties — think the big-name supermarkets like Aldi, Coles and Woolworths. 

So far, we know the ACCC will investigate:

  • the relationship between wholesale, farmgate and retail prices
  • barriers to greater competition in the sector
  • how challenging it is for other companies to enter the market 
  • the impacts online shopping, loyalty programs and changes in technology have on competition 

“When it comes to fresh produce, we understand that many farmers are concerned about weak correlation between the price they receive for their produce and the price consumers pay at the check-out,” ACCC chair Gina Cass-Gottlieb says.

“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 government.”

The ACCC will give an interim report to the federal government later this year.

The final report is due early next year.  

What can the ACCC do about supermarket prices?

The ACCC can’t change prices.

But it can take supermarkets to court if they are found to be breaking the laws in the Competition and Consumer Act. 

And it could pressure the supermarket giants enter some kind of agreement about the way they operate. 

The last time the ACCC did an inquiry like this was in 2008, and it resulted in an agreement with Coles and Woolworths to phase out restrictive provisions in supermarket leases.

This was after the inquiry identified that the practices of having restrictions in tenancy agreements which might have prevented shopping centre managers leasing space to any competing supermarkets — potentially leaving shoppers with fewer options.

The last ACCC inquiry in 2008 resulted in an agreement with Coles and Woolworths to end restrictive provisions in supermarket leases. (ABC News)

Is it illegal for supermarkets to charge high prices?

No.

Businesses are allowed to set their own prices, as the ACCC website points out:

“Prices that people think are too high, or sudden increases in price, are not illegal.

“However, 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.”

Here’s some of the behaviours the ACCC’s calls “anti-competitive pricing“:

  • Minimum resale prices: Suppliers aren’t allowed to stop resellers from selling goods below a minimum price. Resellers also aren’t allowed to ask their suppliers to stop their competitors from discounting products
  • Predatory pricing: Businesses are allowed to products below the cost price. But this could be considered an illegal misuse of market power if it’s done in a way that substantially lessens competition
  • Price fixing: When competitors collude with each other to have the same prices instead of competing against each other

But the ACCC also points out that, just because prices are the same at different businesses, it doesn’t 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.”

What else is being done about supermarket prices?

As mentioned before, there’s a federal Senate inquiry happening. 

It was announced back in December to “inquire into and report on the price setting practices and market power of major supermarkets”.

It’s taking submissions up until February 2 and is due to present its findings on May 7

There’s also going to be an independent review of the food and grocery code and conduct, which was announced earlier this month. 

It’s going to look at whether the code should be changed, including whether it should be made mandatory or include civil penalty provisions. 

That’ll be carried out by former Labor MP Craig Emerson, with a report to be prepared by June 30

Meanwhile, the Queensland government is also running its own inquiry into the price of groceries.

Last week, the state’s Premier Steven Miles said Coles, Woolworths and Aldi had all agreed to participate.

But it’s unclear exactly how Queensland’s inquiry will work – that’ll be finalised in mid-February.

What have supermarkets said?

Woolworths Group chief executive Brad Banducci said the company welcomed the opportunity to assist the ACCC with its inquiry.

“Food inflation has continued to moderate in recent months and we expect this to continue throughout 2024,” he said. 

The Coles Group hasn’t put out a statement about today’s announcement yet. 

But in response to the Queensland inquiry last week, the company said it was “also not immune to the increased cost of doing business”.

“Energy prices, the cost of logistics and packaging have all risen,” a spokesperson said.

“Our suppliers are also challenged with many of the same increases and, rightly so, we have experienced a greater volume of supplier price increase requests which we have to balance.”



Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button