This week, the Senate Committee on Supermarket Prices made 14 recommendations for the Government to consider amending the Competition and Consumer Act 2010 to end the alleged price gouging of the major supermarkets. The Committee’s Competition and Consumer Amendment (Divestiture Powers) Bill 2024 was made public on Tuesday, after a months-long inquiry and tense hearings with the chief executives of Coles and Woolworths. The Bill seeks to “address circumstances where a corporation has, or is
or is taken to have, a substantial degree of market power and has been found to have misused their market power under section 46 of the Act”.
The recommendations are expected to drive greater transparency and fairness across the supply chain, and a few recommendations could transcend the supermarket sector.
Essentially, price gouging would be made illegal, and the Australian Competition and Consumer Commission would have the power to take accused companies, including supermarkets to court.
Inside Retail asked four industry experts with different areas of specialisation from RMIT University to weigh in on the findings of the report.
Dr James Stewart, senior lecturer in Law researches contract and consumer law as well as legal theory; Dr Meg Elkins, senior lecturer in economics, researches community well-being, and society and cultural economics; Vinh Thai, professor of accounting, information systems and supply chain, researches supply chain, logistics and related issues; and Dr Kevin Argus, senior lecturer in business and law, specialises in marketing and business research.
A predictable outcome
“At this stage, these are recommendations only, meaning that some, all, or none of their implementation is possible. A Select Committee is deliberately multi-partisan and tries to encompass the politics of the broader community. However, outside of this committee, there has been a publicised difference in opinion across political lines. While some of the recommendations are perhaps more bullish than expected, they appear generally in line with community sentiment and comparative consumer laws.” – Dr James Stewart
“What I found surprising is the recommendations to establish a new body (Commission on Prices and Competition) – to examine prices and price-setting practices.” – Dr Meg Elkins
“You don’t need to be an industry expert to see where this was going to land. The public nature of recent senate enquiries, including this one, has transparently revealed that the leadership of major corporations is not incentivised in any material way to provide social and environmental outcomes, but rather to meet financial metrics in serving their shareholders.” – Dr Kevin Argus
Flow-on from a more transparent supermarket sector
“There is a common theme of transparency in the recommendations. This will allow consumers to align and ‘buycott’ from a supermarket that promotes their values. Trust is a key element of customer retention, and these recommendations allow supermarkets to strengthen this or rebuild where it has been lost.” – Dr James Stewart
“There will be no immediate impact – but the recommendation to make pricing clearer for customers, including unit pricing (legibility and prominence) in line with consumer expectations, will give consumers more information to understand prices. The Prices Commission would have the power to publish pricing data and provide access to profit data and price-setting policies.”– Dr Meg Elkins
“Given that Australia has entered a phase of social inequity not seen in many’s lifetime and not historically known since earlier last century. It would be a brave person to suggest that seismic change is not possible.” – Dr Kevin Argus
“The recommendation around food wastage calls for transparency from supermarkets about their processes and food donations. If adopted, this could be capitalised by supermarkets demonstrating altruism and corporate social responsibility – which consumers may consider when deciding where to shop. In terms of purchasing behaviour, recommendations from the report if not implemented may, in the long run, encourage consumers to find alternative ways e.g. buying from big wholesalers (such as Costco) or wet markets, or even trying some self-sufficient methods,” – Professor Vinh Thai
Key takeaways for non-supermarket retailers
“The major recommendations for legislative change relate to two sections of the Australian Competition and Consumer Act 2010, sections 46 and 50. Section 46 relates to the misuse of market power, and section 50 relates to prohibiting acquisitions that result in a lessening of competition. Both sections are not supermarket specific and if the amendments are kept broad, may affect anyone caught under the Act.” – Dr James Stewart
“The committee supported economy-wide divesture powers, acknowledging cost of living pressures were not isolated to supermarkets. The review looked at whether the mergers and acquisitions reforms in other sectors such as hardware and liquor are currently adequate for competition laws. There was a recommendation for the code to include the greenlife industry and players like Bunnings. Any markets with unfair pricing practices and a distinct lack of competition will come under scrutiny with the report. Potentially, this would include industry sectors such as hardware and pharmacies.”– Dr Meg Elkins“The Greens’ message via the inquiry is that organisations need to do better – or rather be made to do better. It’s a debate that is now public and an easy debate for the general public to weigh in on as the winners and losers are clear to see.” – Dr Kevin Argus