Supermarkets to cop fines for gouging shoppers on price
Consumers will be given additional protection against price gouging at the checkout, but Australia’s major supermarkets have a six-month reprieve before the laws come into force.
The federal government has introduced rules to limit “grocery overpricing” with changes to the Australian Food and Grocery Code of Conduct made mandatory in April.
The move against price gouging, which was announced before a rapid consultation period earlier in the year, will come into force on July 1.
The government said on Sunday that the ban would prohibit very large retailers from charging excessive prices compared to the cost of supply plus a reasonable margin.
In March, the Australian Competition and Consumer Commission found that the near-duopoly ownership of Coles and Woolworths gave them little incentive to compete strongly and said they were among the most profitable supermarkets in the world.
But the report never directly accused supermarkets of gouging customers; Both Coles and Woolworths have consistently denied this.
It did not make a determination or attempt to define whether the supermarket prices were “excessive” because high margins are not prohibited under consumer law.
Starting in July, supermarkets could face fines of up to $10 million per violation; this is three times the value of the benefit received, or 10 per cent of the company’s turnover in the previous 12 months.
The commission will be responsible for supervising the new regime.
Finance Minister 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 till, and that’s what this is about,” they said in a joint statement.
The consumer watchdog’s report found that grocery prices more than doubled the wage rate between late 2022 and early 2023, with at least some of those increases attributed to additional profits from Coles, Woolworths and Aldi.
While the report acknowledged that the costs of doing business have increased, it was stated that supermarkets increased their profit margins despite the disruptions caused by the Covid-19 outbreak in their supply chains.
Aldi’s growth acted as a handbrake on the duo, but the commission noted that the German discount chain did not compete directly with them across all product lines.
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