Woolworths and Coles pare gains after ACCC findings spark rally
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The news: Shares in Woolworths and Coles both fell on Monday, paring gains from Friday when they surged after the ACCC outlined a slate of recommendations to improve competition across supermarkets but stopped short of recommending a divestiture.
The numbers: Woolworths (-1.1%) and Coles (-1.4%) were both trading lower at 2pm AEDT. Metcash (-1.3%), which owns rivals IGA and Foodland, also fell. Consumer staples, down 1.3%, was the worst performing sector as the ASX 200 index edged up 0.1%.
The context: The final report by the ACCC, following its year-long inquiry into grocery prices, found Woolworths and Coles wield too much power and fit the definition of an oligopoly.
The report said Woolworths and Coles have entrenched power, limited incentives to compete vigorously and are among the most profitable supermarkets globally, with margins increasing since the pandemic.
However, the ACCC did not recommend a forced divestiture, and both companies notched significant share price gains following the announcement.
