Australia's competition watchdog calls for major supermarket reforms

Coles, Woolworths, and ALDI are amongst the most profitable supermarkets globally.

The Australian Competition and Consumer Commission (ACCC) has released its final report on the supermarket industry, recommending 20 reforms to increase competition and improve outcomes for consumers and suppliers.

The report found that Coles, Woolworths, and ALDI are amongst the most profitable supermarkets globally, with their average product margins increasing over the past five years. The ACCC concluded that limited competition is leading to higher prices and poorer outcomes for consumers and suppliers.

The ACCC recommends that ALDI, Coles, and Woolworths be required to publish prices online. Coles and Woolworths should also provide real-time price data to third-party comparison sites. This would make it easier for consumers to compare prices and encourage stronger price competition.

The ACCC also called for planning and zoning reforms to make it easier for new supermarkets to enter the market. It said current rules restrict the supply of suitable retail sites, making it difficult for smaller competitors to expand. Governments are urged to simplify these processes to allow more entrants into the sector.

Coles and Woolworths have acquired around 260 sites since 2019, often without ACCC notification. The ACCC supports new merger laws and further notification requirements to prevent major chains from consolidating market power without scrutiny.

Additionally, the ACCC recommends that supermarkets clearly disclose price increases and shrinkflation—when products shrink in size but prices stay the same or increase. This information should be displayed on shelves and online, helping consumers make better-informed decisions.

In regional and remote areas, the ACCC found prices are higher due to freight costs and limited competition. It recommends mandatory pricing displays for all products in these areas and government support for community-owned stores where competition is lacking.

The report also highlighted the imbalance of power between major supermarkets and fresh produce suppliers. It recommends giving suppliers clearer information on tender processes and demand forecasts and prohibiting supermarkets from unilaterally changing purchase orders.

Moreover, the ACCC also called for stronger protections under the Food and Grocery Code of Conduct.