Report recommends forced sale for badly behaved supermarkets

Supermarkets face forcible sales if they are caught using anti-competitive tactics if government recommendations are accepted.

The report resulting from the Senate inquiry into supermarket pricing was published yesterday and, as well as possible forced sales, it recommends making pricing clearer and promotions less confusing.

The Greens-led inquiry made 14 recommendations over a range of subjects designed to make pricing more affordable, bridge the gulf between farm-gate prices and retail pricing and cut down on food waste.

Price gouging

Greens senator Nick McKim said the landmark report offered concrete solutions to tackle price increases that had “done so much harm” to the Australian people. 

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

“Chief amongst these is the recommendation that price gouging be made illegal. This would mean that corporations couldn’t just arbitrarily increase prices without facing consequences from the courts.

“This would be a significant new power to stop unreasonable pricing that has been rampant for years because of a lack of competition.

“The committee has also recommended divestiture powers for the supermarket sector, which would give the Federal Court the power to break up corporations when they abuse their market power or act unconscionably.”

Other recommendations include:

• Changing the Competition and Consumer Act to prohibit price gouging
• Establishing a commission on price gouging and other restrictions on effective competition, with duties including monitoring prices and conducting market studies
• Forcing supermarkets to publish historic pricing data
• Giving the Australian Competition and Consumer Commission power to investigate and prosecute unfair trading
• Make the Food and Grocery Code of Conduct Mandatory with an appropriate regime of financial penalties attached

The inquiry heard testimony from the major supermarket chains, retail experts, suppliers and consumer groups such as CHOICE.  

It comes on the back of billion-dollar annual profits for Coles and Woolworths and rapidly escalating prices. 

Testimony occasionally became quite fiery, including this exchange between Woolworths chief executive Brad Banducci and inquiry chair Senator McKim.

Will it make a difference?

So, how likely is it that any of these recommendations will be adopted? Sadly, not very, especially when it comes to forced divestiture. 

While the Greens are keen on the idea, neither Labor nor the LNP will agree to forced divestiture. Labor treads a very fine line when it comes to backing from the business sector and will not want to spook the horses. And the LNP has already offered an alternative plan to curb the duopoly’s market power.

Nationals leader David Littleproud said the Coalition would implement a ‘big stick’ approach, but was light on details other than to say it would not include forced divestiture. 

Labor has also been reluctant to agree to such a drastic step.

Assistant Competition Minister Andrew Leigh said he didn’t see it as an option. 

“The National Farmers Federation have argued against divestiture and the ACTU have made the point that it could potentially hurt workers, so we’re sceptical,” he told ABC Radio National.

“We don’t see that as being a significant tool in the fight against market concentration.”

There may be some tinkering at the edges of the recommendations, but once again, both parties will be reluctant to specifically target supermarkets.

The ACCC did have impressive success in extracting $120 million in fines and penalties from Qantas this week, but that was conducted under general consumer law, not legislation for a specific industry. 

Do you think the report made the right recommendations? What would you like to see changed? Why not share your thoughts in the comments section below?

Also read: Should supermarkets let you know about shrinkflation?