Surprises in supermarket pricing report
Sixteen months in the making, the ACCC findings may leave consumers disappointed.

Key Points
Consumer watchdog reports on supermarkets and makes 20 recommendations.
Report does not conclude price gouging exists but notes that Australian supermarkets are most profitable in the world.
“No silver bullet” solution but recommendations focus on price transparency and supplier support
The subject of alleged “price gouging” by supermarkets is never far from the headlines.
In the past week, on the election trail, Prime Minister, Anthony Albanese, said he would make price gouging illegal while Opposition Leader, Peter Dutton, has promised to be tough on businesses that gouge consumers.
But what does the Australian Competition and Consumer Commission inquiry into supermarket pricing have to say?
Its final report has made 20 recommendations after finding that ALDI, Coles, and Woolworths are some of the most profitable supermarket businesses among global peers and their average product margins have increased over the past five financial years.
The ACCC investigation was ordered by the Federal Government after allegations of price gouging during the pandemic and cost-of-living crisis that followed.
It is the first of its kind in 16 years and despite concluding Australia has one of the most profitable supermarket sectors in the world, the big two – Woolworths and Coles – don't have a strict duopoly.
And despite consumer anger over rising prices, the ACCC noted that there’s nothing illegal about businesses making a profit.
The report did find the supermarket sector is “not working well”, leading to poorer outcomes for consumers and suppliers.
So, according to ACCC deputy chair, Mick Keogh, the 20 recommendations are not designed to slap down the supermarkets but aim to “improve conditions for competition in the sector and deliver better outcomes”.
“There is no ‘silver bullet’ that will address all the issues we have identified in the supermarket sector, but we are confident that our recommendations will … boost competition in the sector,” Mr Keogh said.
Strengthening competition over the short, medium, and longer term
Supermarkets should make it easier for shoppers to compare prices across the sector, increasing incentives to compete more vigorously on price.
The ACCC is recommending ALDI, Coles, and Woolworths be required to publish their prices on their websites, and on online price comparison tools.
Barriers for new players
The ACCC says it is unlikely that there will be large-scale entry of a new supermarket chain, as demonstrated by the fact that it took ALDI more than 20 years to achieve its current market share of 9%.
What’s more likely is the entry of small-scale independents. The ACCC concedes that probably won’t improve price competition but would provide a different range and level of service.
The availability of land and ease of developing supermarkets is a problem. All levels of government should simplify and harmonise planning and zoning requirements to make it easier to establish new supermarkets.
New merger regime
The inquiry has heard that Coles and Woolworths have advantages in competing for suitable retail sites due to their significant size, reputation, and financial resources. Consequently, their potential rivals find securing retail sites very challenging.
The ACCC says recently passed merger reform laws will give it greater power to scrutinise supermarket acquisitions and guard against any substantial lessening of competition within the sector.
“The recommendations outlined in our final report, in partnership with the new merger laws, will help to improve competition within the sector over the longer term, and lead to better outcomes for both consumers and suppliers,” Mr Keogh said.
Helping consumers make decisions
The ACCC is recommending greater transparency of pricing, promotions, and loyalty programs to reduce the burden on consumers when they try to understand the value for money of supermarket offers.
“Through clearer sales tickets and promotions, consumers will be better placed to make more informed decisions about what products offer the best value for them at the checkout,” Mr Keogh said.
Supermarkets can suddenly increase price, while also shrinking a product’s size by stealth. The ACCC is recommending that supermarkets publish notifications when this occurs.
“By giving consumers this transparency over what are effectively price increases, consumers would be better able to ‘vote with their feet’ and switch to cheaper alternatives if that is their preference,” Mr Keogh said.
Improving price visibility in remote areas
The higher freight costs to serve regional and remote areas are likely to be the primary reasons for higher prices in these areas. A lack of competition is also likely to affect prices and result in reduced range, store amenity, opening hours, and service quality compared to more competitive markets in metropolitan areas.
In response, the ACCC wants improved price transparency. It wants governments of all levels to consider supporting community-owned and run stores in remote areas where there is limited or no choice of supermarket.
Fresh produce suppliers
As news reports have repeatedly revealed, the big supermarkets lord it over their suppliers.
The ACCC is recommending that ALDI, Coles, and Woolworths be required to provide fresh produce suppliers with greater transparency about the weekly tendering processes they use to negotiate price and volumes with suppliers.
“Many suppliers fear retribution from raising concerns directly with the major supermarkets. We found that suppliers need more information and protections to be able to make more informed investment decisions,” the ACCC found.
Major retailers should be subject to mandatory market reporting obligations, and the Food and Grocery Code should be amended to prohibit grocery retailers from being able to negotiate out of core protections in the code.
Price gouging claims don't stack up
Despite their increased profit margins, the ACCC was unable to conclusively say whether Woolworths and Coles were actively price gouging.
“We didn’t reach that [price gouging] conclusion, and part of the reason is the complexity of making that when you look at the range of products and the different margins that they have, and the fact that they change pricing almost on a weekly basis,” Mr Keogh said.
“It’s very difficult to get to the bottom of that. The profitability figures do give you some very broad picture of what’s happening, but the issue of price gouging isn’t one we were able to engage in too closely.”
The full report and all recommendations are available here.
The ACCC made 20 recommendations for change, but that will require action from the Federal Government, which is now in caretaker mode in the lead-up to the election.
The current government has budgeted $2.9 million to help suppliers “stand up to the big supermarkets", but the Farmers Federation says more should be done to support suppliers.
"Farmers just want to make sure they're getting a fair deal and that transparency, that ability for them to negotiate, still isn’t coming through in a lot of these recommendations," the group's president, David Jochinke, told the ABC.
Woolworths, Coles, and wholesale distributor Metcash, which owns several independent retail brands, have said they are reviewing the report in detail and will consider the ACCC’s recommendations.