Consumers in Australia will soon have greater protection against price gouging at supermarkets as new regulations come into effect. The federal government has introduced measures to limit “excessive pricing of groceries” through amendments to the Food and Grocery Code of Conduct. These changes, which were made mandatory in April 2023, will take effect on July 1, 2024.
The Australian Competition and Consumer Commission (ACCC) will oversee the enforcement of these new rules. Supermarkets found to be charging excessive prices, defined as prices significantly higher than the cost of supply plus a reasonable margin, will face substantial penalties. According to the new legislation, fines can reach up to $10 million for each violation, or three times the financial benefit gained, or 10 percent of the company’s turnover for the previous year.
The government’s decision comes after a report from the ACCC revealed that major retailers, particularly Coles and Woolworths, have enjoyed high profit margins without significant competition. The report highlighted that these supermarkets are among the most profitable in the world, yet did not directly accuse them of price gouging, a claim both companies have denied.
In a joint statement, Treasurer Jim Chalmers emphasized that the changes aim to ease the cost of living for Australians by ensuring fairer prices at the checkout. He remarked, “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.”
A recent ACCC report indicated that grocery prices have risen at more than double the rate of wages from late 2022 to early 2023. This increase has been linked to additional profits accumulated by Coles, Woolworths, and Aldi. Although the report acknowledged rising business costs, it noted that supermarkets had managed to increase their profit margins despite disruptions in supply chains related to the COVID-19 pandemic.
While Aldi’s presence has somewhat limited the influence of the Coles-Woolworths duopoly, the ACCC pointed out that Aldi does not compete directly with them across all product lines.
As Australia prepares for the implementation of these laws, the focus is on ensuring consumers are treated fairly at the checkout, with the ACCC poised to hold supermarkets accountable for their pricing practices. The upcoming changes represent a significant shift in consumer protection regulations, aimed at fostering competition and transparency in the grocery sector.
