Coles and Woolworths have publicly opposed new federal laws designed to prevent price gouging, asserting that these regulations will negatively impact pricing for consumers. The Australian government has introduced measures that prohibit large retailers from charging excessive prices relative to supply costs and a reasonable profit margin. This legislation, part of an updated food and grocery code of conduct made mandatory in April 2023, will be enforced by the competition regulator.
Federal Treasurer Jim Chalmers highlighted both Coles and Woolworths as key players affected by these laws. Beginning July 1, 2023, the companies could face penalties of up to $10 million per violation, three times the financial benefit gained from the breach, or 10 percent of their turnover from the previous year.
In a statement released on Sunday, a representative for Coles criticized the price-gouging legislation, claiming it would exert “upward, not downward” pressure on prices. The supermarket chain argued that numerous inquiries have shown that rising grocery prices are primarily driven by increased costs in energy, fuel, insurance, production, freight, and distribution. The spokesperson emphasized, “For every $100 customers spend at Coles, we make around $2.43 in profit — less than 3 cents in the dollar.”
Coles also expressed concern that exempting large multinational companies from the regulations does not accurately reflect Australian shopping habits and could weaken competition in the grocery sector.
In a similar vein, a spokesperson for Woolworths described the new law as “unprecedented,” criticizing it for specifically targeting two Australian-owned companies. He argued that this creates an “uneven playing field” that allows larger, foreign-owned retailers to charge whatever prices they wish without the proposed restrictions.
“We acknowledge the tabling of this regulation,” the Woolworths spokesman stated. “Right now, we are absolutely focused on delivering the best value for customers.” He pointed out that average prices at Woolworths have declined year-on-year for seven consecutive quarters, benefiting consumers.
A report from the Australian Competition and Consumer Commission in March 2023 found that Coles and Woolworths rank among the most profitable supermarket chains globally, with profit margins increasing over the past five financial years. While the report confirmed the concentrated nature of Australia’s supermarket sector, dominated by the two companies, it found little evidence of price gouging.
In the financial year 2025, Coles reported a profit of $1.08 billion, while Woolworths posted a profit of $1.4 billion. The ongoing debate surrounding these new regulations highlights the complex dynamics of the Australian grocery market and raises questions about consumer prices in the face of regulatory changes.
