UPDATE: Coles and Woolworths are fiercely opposing newly enacted Federal laws aimed at preventing price gouging, claiming these regulations could harm consumers instead of helping them. The Federal Government announced these changes to Australia’s food and grocery code of conduct, effective April 2023, which prohibits large retailers from imposing excessive prices compared to supply costs.
Effective July 1, both supermarket giants face hefty fines up to $10 million per violation, three times the financial benefit gained from the breach, or 10 percent of their annual turnover. Federal Treasurer Jim Chalmers explicitly named Coles and Woolworths as the primary targets of these new laws.
Coles argued that these price-gouging laws would create “upward, not downward” pressure on grocery prices. A spokesperson stated, “For every $100 customers spend at Coles, we make around $2.43 in profit—less than 3 cents on the dollar.” They emphasized that rising costs in energy, fuel, and distribution are the real drivers behind increasing grocery prices, not profit margins.
“At a time when the focus should be on easing cost-of-living pressures, these regulations risk doing the opposite,” a Coles spokesperson said.
Meanwhile, Woolworths called the legislation “unprecedented,” arguing it unfairly targets only Australian-owned companies, leaving foreign competitors unrestricted. A Woolworths representative stated, “We are focused on delivering the best value for customers,” highlighting that average prices have decreased for seven consecutive quarters.
In a recent report, the Australian Competition and Consumer Commission revealed that Coles and Woolworths are among the world’s most profitable supermarkets, with profit margins increasing over the past five years. Despite this, the report found little evidence of price gouging in the sector.
For the financial year 2025, Coles reported a staggering $1.08 billion in profits, while Woolworths achieved $1.4 billion. The concentration of market power in the hands of these two retailers raises concerns about competition and pricing strategies across the Australian grocery landscape.
The introduction of these laws could significantly alter the dynamics of the grocery sector, impacting consumer prices and the operational strategies of major retailers. As the situation develops, all eyes will be on how Coles and Woolworths adjust to these regulations and what the long-term implications will be for Australian shoppers.
Stay tuned for updates as this story unfolds, and watch for how these changes may affect your grocery bill in the coming months.
