Supermarkets hit back at Labor’s price gouging ban
Supermarkets and retailers have warned that the government’s ban on grocery price gouging could backfire, criticizing the move as unprecedented and unfair because it targets only the largest chains.
Albania’s government will announce on Sunday that it will ban price gouging at Coles and Woolworths, following a damning report by its competition watchdog earlier this year. Australian supermarkets were among the most profitable in the world.
Australian Competition and Consumer Commission (ACCC) launched an investigation in 2024 into major supermarkets accused of failing to pass on savings to consumers during the cost of living crisis, but failed to prove the companies were price gouging.
Under the amended Food and Grocery Act, supermarkets must only charge a reasonable margin on products. The new rules will come into force on July 1, 2026.
“We are cracking down on supermarket price gouging to help Australians get a better deal at the checkout,” Treasurer Jim Chalmers and Deputy Minister for Productivity and Competitiveness Andrew Leigh said in a joint statement.
“The ban will prohibit very large retailers from charging excessively high prices compared to the cost of supply plus a reasonable margin.”
The ACCC will receive a $30 million funding boost to oversee the new regulations. As previously reported, Coles and Woolworths face a maximum fine of $10 million if they are found to have breached the rules.
Australian Retail Association chief executive Chris Rodwell warned that regulating profit margins risked making essential food items more expensive, with grocery prices driven mostly by operating costs such as energy and transport.
“The ACCC Supermarket Inquiry found no evidence of excessive pricing,” he said.
“Implementing a new subjective measure that regulators do not recommend would increase legal risk, compliance costs, and uncertainty throughout the grocery industry.”
Rodwell said regulation and tax relief were the best ways to put downward pressure on prices as “businesses large and small continue to face a cost of doing business crisis.”
A Woolworths Group spokesman said the law was “unprecedented in that it targets only two Australian-owned companies” and would “create an uneven playing field where much larger, foreign-owned retailers will have the freedom to charge customers as much as they want”.
“We compete strongly for every item in our customers’ baskets,” they said, claiming Woolworths’ average annual prices had fallen for seven consecutive quarters.
A Coles Group spokesman said the changes risked weakening competition.
“Australia’s grocery industry is extremely competitive and removing large multinationals and other major players from this legislation does not reflect the way Australians shop,” they said.
“For every $100 customers spend at Coles, we make a profit of around $2.43 – less than 3c on the dollar. We call on the government to tackle the real causes of high food prices for Australian families. Increasing regulation is likely to put upward, not downward, pressure on prices.”
Chalmers said the change would fill a gap in Australia’s competition and consumer protection framework and provide protection for consumers after the investigation found Coles and Woolworths had limited incentive to compete.
Albanian government An inflated price struggle was initiated as part of an election promiseand launched a community consultation meeting in October to support the changes.
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Brittany Busch is the federal politics correspondent for The Age and the Sydney Morning Herald.Connect via email.
