Australia’s Supermarket Price Gouging Ban Sparks Cost and Competition Debate
Right now in Australia, a major fight is brewing over grocery prices, and it’s putting supermarkets, the government, and shoppers right in the middle of a heated debate. The Albanese government has announced a new ban on what it calls “excessive pricing” by large supermarkets, and while the move has been sold as a win for families struggling with the cost of living, retailers are warning it could actually push prices higher.
Under changes to the Food and Grocery Code of Conduct, which was made mandatory earlier this year, very large retailers will be banned from charging prices deemed excessive compared to their supply costs plus a reasonable margin. These new rules are set to come into effect from July 1 next year, and they will be enforced by the Australian Competition and Consumer Commission. Heavy penalties are on the table, including fines of up to $10 million per breach, three times the benefit gained, or even 10 per cent of a company’s annual turnover.
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The government says the goal is simple: give families a fairer deal at the checkout. Treasurer Jim Chalmers has framed the move as standing up for households who feel grocery bills have been climbing faster than wages. A recent watchdog report found that grocery prices rose at more than double the rate of wages in late 2022 and early 2023, with at least some of those increases linked to higher supermarket profit margins.
But supermarkets are pushing back hard. Coles and Woolworths argue that the rules are excessive, poorly targeted, and likely to backfire. Coles has said its profit is around $2.43 for every $100 spent, insisting margins are slim and that more regulation will simply add costs that end up being passed on to shoppers. Woolworths has warned of a “butterfly effect”, claiming customers could miss out on discounts and special deals it says it has delivered consistently over recent quarters.
Retail groups have also raised concerns about fairness. It has been argued that the laws mainly target Australia’s two biggest supermarket chains, while larger foreign-owned retailers could avoid the same restrictions, creating what they describe as an uneven playing field. Industry bodies say there is no clear evidence of widespread price gouging and that the real drivers of high prices are rising energy, freight, labour, insurance, and production costs across the supply chain.
Politically, the issue is far from settled. The opposition has said it will examine the legislation closely, while business groups have criticised the move as regulation without sufficient evidence. At the same time, consumer advocates point to the dominance and profitability of major supermarkets as a reason stronger deterrents are needed.
So for shoppers, the big question remains unanswered. Will this ban finally rein in grocery prices, or will it lead to fewer discounts and higher costs at the checkout? That answer may only become clear once the new rules take effect and the real-world impact starts to be felt.
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