In 2023 the big two supermarkets, Coles and Woolworths, were subject to increasing scrutiny from consumers and media regarding their pricing policies. And if they’re expecting an easier run in 2024, they’re sadly mistaken.
In 2024, they have already been criticised for paying farmers 1978 prices for produce but not passing those prices on to consumers. Now, the federal government and the Australian Competition and Consumer Commission (ACCC) are turning up the heat.
In the face of cost-of-living criticisms, the Labor government last week flagged a review of supermarket industry codes. It announced the appointment of Dr Craig Emerson to lead a review of the Food and Grocery Code. Prime Minister Anthony Albanese said in a statement the government aimed “to ensure that the supermarket sector is working as it should.”
But the scrutiny won’t stop there. The ACCC has already undertaken an investigation into some supermarket pricing practices, and has hinted at possibly taking legal action.
Focus on deceptive behaviour
The ACCC has often been seen as a somewhat toothless organisation, with the ability to report but not act. And while it’s true it has limited power in some respects – supermarket price-gouging, for example – it can certainly act on deceptive behaviour.
This ability to act on deceptive behaviour is now the focus of ACCC chair Gina Cass-Gottlieb. Appointed to the role in March last year, Ms Cass-Gottlieb can already lay claims to a significant ‘scalp’. She was a driving force in the ACCC’s investigation into the Qantas ticket sale scandal.
The investigation into the airline selling tickets for thousands of cancelled flights resulted in Ms Cass-Gottlieb instigating legal proceedings. The ACCC lodged its case against Qantas last August, and it’s shaping up as the biggest in Australian corporate history.
ACCC’s supermarket strategy
While the ACCC’s powers are finite, the pricing ‘strategies’ of supermarkets are well within its remit. It is to these that Ms Cass-Gottlieb is directing her attention. Specifically, the ACCC is closely examining the practice of ‘was/now’ pricing.
‘Was/now’ pricing is the practice of supermarkets displaying a previous price above a current, lower regular price. As opposed to the temporary nature of ‘specials’, these tags suggest that an item now has a cheaper regular price than say six or 12 months ago.
There’s nothing inherently wrong with such a practice, unless it is deceptive – deliberately or otherwise. One such method of ‘was/now’ deception that has been suggested is the brief increase of a price before lowering it. This allows supermarkets to display an exact ‘was’ date, with the price of the item on that date.
While the new price might indeed be cheaper, if the price had been raised only briefly to allow the claim, does that constitute deceptive behaviour? That is a question the ACCC is asking and, if it believes the answer is ‘yes’, it will take action.
Size of the package
Another potentially deceptive tactic the ACCC could scrutinise is the changing of package weights without changing the packaging size. That issue has been highlighted by YourLifeChoices, and can certainly result in supermarket customers being deceived.
While such package changes may be driven by the product manufacturers, YourLifeChoices has highlighted the practice being used by Woolworths.
The potential for litigation is real, says Ms Cass-Gottlieb. She has indicated “it is possible” that a case will be brought to court some time this year.
One way or another, Woolworths and Coles, which both returned significant profits in 2022/23, will be closely monitored in 2024.
Do the ‘big two’ supermarkets need to do more to deliver cost-of-living relief to their customers? What would you like to see them do? Let us know via the comments section below.
Also read: Pressure builds on supermarkets as farmers claim they’re being paid 1978 prices
