Consumers concerned with supermarket oligopoly: ACCC
Make us a preferred source
Make us a preferred source on Google
The news: Australian consumers and grocery suppliers have told the competition regulator they are worried major retailers Coles and Woolworths have considerable market power that they are using to disadvantage customers and suppliers. But it's not a view on which the watchdog has taken a final position.
The context: In its interim supermarket inquiry, the Australian Competition and Consumer Commission (ACCC) said Costco's entry and Aldi's successful expansion over a prolonged period show just how long it takes and how much it costs to expand in Australia's supermarket landscape, as well as the need to offer something different to major retailers.
The regulator also said its preliminary view is that planning and zoning laws may slow a supermarket retailer’s ability to develop new stores by creating additional costs or adding significant delays.
The regulator has labelled Australia's supermarket industry as an oligopoly, where most supply comes from a small number of market participants.
Suppliers concerns to the ACCC have concentrated around contract terms and information asymmetries with retailers that the regulator plans to probe further before its final report in February.
Consumers are concerned that by not participating in loyalty programs, they are penalised by retailers offering "member-only pricing".
The ACCC's consumer survey conducted as part of its inquiry received a record 21,481 responses.
Woolworths and Coles account for 67% of supermarket retail sales nationally. Aldi accounts for 9% and Metcash supplied independent supermarkets 7%.
This is the first in-depth inquiry into the grocery industry in Australia since 2008, when the ACCC last raised concerns that zoning laws could be raising barriers to market expansion.
The interim report comes just four days after the ACCC announced legal action against Coles and Woolworths over allegedly misleading discount pricing practices.
The government announced the ACCC inquiry in January, with a final report due to government by 28 February, 2025. Submissions on today's interim report are due by 18 October.
The regulator will, in the second half of its report, focus on competition between Coles and Woolworths, as well as broader competition retail competition issues.
What they said: “Oligopolistic market structures can limit incentives to compete vigorously on price. We see Woolworths and Coles providing a broadly similar experience to customers through largely undifferentiated product ranges, pricing at similar levels and similar non-price offerings including loyalty programs,” ACCC deputy chair Mick Keogh said.
“We will examine whether supermarkets are exercising market power to increase retail prices more than is necessary to accommodate increases in the wholesale prices supermarkets pay,” he said.
Responding to the report, Prime Minister Anthony Albanese said "this is an important piece of work and we will study it closely".
"My Government is taking a range of actions to make sure Australians are paying a fair price at the checkout and Australian suppliers are getting a fair price for their goods."
Assistant Minister for Competition Andrew Leigh said: "Greater competition is critical for lifting dynamism, productivity and wages growth, putting downward pressure on prices and delivering more choice for Australians dealing with cost-of-living pressures".
The sources: ACCC interim supermarket inquiry report, Australian Government
