Senate inquiry into supermarket prices recommends divestiture powers for market power misuse

Senators investigating supermarket prices in a Greens-led inquiry have recommended new laws allowing for the forced break-up of the grocery giants if they have misused the market power or engaged in “unconscionable conduct”.

But the Federal Government has already ruled out such suggestions, including by its own senators on the committee, which handed down its final report on Tuesday.

“This is a landmark report with serious proposals to tackle the price of food, and the profiteering that has done so much harm to the people of Australia,“ said committee chair, Greens Senator Nick McKim.

“The committee has produced concrete steps that would tackle these problems head on.”

“Chief among these is the recommendation that price gouging be made illegal.”

Treasurer Jim Chalmers earlier on Tuesday cited merger reform and a beefed up food and grocery code of conduct among the steps the Government had already taken to tackle grocery prices. It has also ordered the consumer watchdog hold its own inquiry, while there are also inquiries in the South Australian and Queensland Parliaments.

“We want a fair go for families and farmers. We know that it’s at the check-out where some of these cost-of-living pressures are most acutely, most harshly felt,” Dr Chalmers said.

“We’re doing a range of things to try and make our supermarket sector more competitive.”

The big supermarkets, and the Federal Government’s own food and grocery code reviewer, Craig Emerson, have pushed back on the need for divestiture laws.

Coles boss Leah Weckert told the Senate that it was most likely regional and remote areas that would lose out, as economies of scale meant Coles could offer the same prices for packaged groceries across every State, with only a handful of exceptions.

Labor Senators on the committee did not support the divestiture suggestions. Coalition senators said while there had not been persuasive evidence of the need for divestiture powers, they should be targeted to sectors of concern and have safeguards and a clear public benefit test.

The Senate committee — which questioned the bosses of Australia’s big four grocery companies: Woolworths, Coles, Aldi and Metcash — also wants the horticulture code of conduct and plant retailers included in the mandatory food and grocery code. Such a proposal would incorporate the likes of Bunnings — a move the hardware giant has pushed back on.

Woolworths — which supports the food and grocery code being mandatory — said it would take time to review the report and continue to engage constructively with the other inquiries and reviews underway.

“In the meantime, grocery inflation is coming down in our supermarkets and we continue to work hard to help customers find the best possible value, while also taking care of our team and doing the right thing with our suppliers,” a spokesman said.

Coles said it was pleased to have been able to appear at the inquiry, and reiterated it was committed to providing customers with value as they faced a raft of cost and price increases.

“To the extent that the recommendations are likely to adversely impact the operation of open and free competitive markets in the provision of food and grocery in Australia, we would not support the recommendations,” it said, adding it was also assisting the ACCC, and the food and grocery code review.

Both supermarkets have made submissions to the Queensland and SA inquiries.

The Senate committee has also called for a separate commission on prices and competition to “examine prices and price-setting practices across the economy” and beefed up funding to the Australian Competition and Consumer Commission.

Among the 14 recommendations are also calls for the Federal environment department to address food waste in the supermarket sector, including through reform of use-by and best before labels, requirements for the supermarkets to publish regular data on food waste and examine if “unrealistic cosmetic standards” are affecting farmers and adding to food waste.

The committee also wants more work, recommending the Senate refer it to probe the role of multinational food manufacturers in setting prices, and whether Australians are paying more, and the role of “big box” retailers in price-setting.