Supermarkets and major retailers have expressed strong opposition to the Albanese government’s forthcoming ban on grocery price gouging, arguing that the measure unfairly targets Australia’s largest supermarket chains, Coles and Woolworths. The government is set to announce the ban on Sunday, following a report by the Australian Competition and Consumer Commission (ACCC) that highlighted the high profitability of Australian supermarkets.
The ACCC initiated an inquiry into the pricing practices of major supermarkets in 2024 amid allegations of failing to pass on savings to consumers during a cost-of-living crisis. Although the inquiry did not find conclusive evidence of price gouging, the new regulations under the amended Food and Grocery Code will require supermarkets to charge only a reasonable margin on products, effective July 1, 2026.
In a joint statement, Treasurer Jim Chalmers and Assistant Minister for Productivity and Competition Andrew Leigh emphasized the government’s commitment to addressing supermarket price gouging. “We’re cracking down on supermarket price gouging to help Australians get a better deal at the checkout,” they declared. “The ban will prohibit very large retailers from charging prices that are excessive when compared to the cost of the supply plus a reasonable margin.”
Industry Concerns and Reactions
The Australian Retail Association’s chief, Chris Rodwell, voiced concerns that regulating profit margins could inadvertently lead to higher prices for essential goods. He pointed out that grocery prices are largely influenced by business costs, including energy and freight. “The ACCC Supermarkets Inquiry found no evidence of excessive pricing,” Rodwell stated. “Introducing a subjective new measure that regulators did not recommend will increase legal risk, compliance costs, and uncertainty across the grocery sector.”
Woolworths Group criticized the legislation as “unprecedented by targeting only two Australian-owned companies,” arguing that it creates “an uneven playing field which will see much larger, foreign-owned retailers free to charge customers whatever they want.” A spokesperson for Woolworths highlighted the company’s competitive pricing, noting a decline in average year-on-year prices for seven consecutive quarters.
Similarly, Coles Group expressed concerns that the changes might weaken competition. “Australia’s grocery sector is highly competitive, and carving out large multinationals and other major players from this legislation does not reflect how Australians shop,” a Coles spokesperson said. They emphasized the company’s modest profit margins, stating, “For every $100 customers spend at Coles, we make around $2.43 in profit – less than 3¢ in the dollar.”
Government’s Justification and Future Implications
Treasurer Jim Chalmers defended the new regulations, asserting that they fill a critical gap in Australia’s competition and consumer protection framework. The government views the ban as a necessary safeguard for consumers, particularly after the inquiry revealed that Coles and Woolworths had limited incentives to compete aggressively on pricing.
The Albanese government had pledged to tackle price gouging as part of its election campaign, and the announcement of the ban follows a period of community consultation initiated in October. The ACCC will receive a $30 million funding boost to enforce the new rules, with Coles and Woolworths facing potential penalties of up to $10 million for violations.
Looking Forward: The Broader Impact
The move to regulate supermarket pricing is expected to have wide-ranging implications for the retail sector. Experts warn that increased regulation could lead to higher compliance costs and potentially stifle competition. The debate over the effectiveness of such measures continues, with some advocating for alternative solutions such as tax relief and broader regulatory reforms to address the underlying causes of high grocery prices.
As the July 2026 implementation date approaches, both the government and the retail industry will be closely monitoring the impact of these regulations on prices and competition. The outcome could set a precedent for how Australia addresses similar issues in other sectors, as the nation grapples with broader economic challenges.
