The market power of the big two retailers is under scrutiny after the Australian Competition and Consumer Commission went to court last month in two separate actions that allege Coles and Woolworths breached federal law by misleading customers with discount pricing claims.
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The watchdog alleges the supermarkets increased prices for goods by at least 15 per cent for brief periods before placing them in the “prices dropped” or “Down Down” promotions at prices that were actually higher than, or the same as, the previous longstanding prices.
The companies deny any breach of the Australian Consumer Law.
Prime Minister Anthony Albanese has backed the ACCC in its court action to fine the supermarkets, while also pledging $30 million in legal funding for the regulator so it can investigate deceptive pricing practices.
The government is also preparing a mandatory food and grocery code, which is meant to support farmers who supply food to the supermarkets, and is working with the states on planning and zoning rules to help Aldi and others set up more stores to take on Coles and Woolworths.
Albanese has attacked the Coalition proposal as a heavy market intervention at odds with the Liberal Party’s free-market claims.
“Having done nothing for a decade, they now want some command economy control mechanism where you force sales of grocery supermarkets,” he said last month.
Albanese argued that an order to force Coles to sell a store in a city suburb would probably mean that the other supermarket giant would buy the asset.
Despite those warnings, the Coalition proposal is backed by half of all respondents and has a narrow majority – 52 per cent – among those who identified as uncommitted about whom they would vote for at the election.
The divestiture power has stronger support among wealthier voters, with 58 per cent in favour, compared with those on lower incomes, with 45 per cent in favour.
Coles chief executive Leah Weckert said last week that the company aimed to offer genuine discounts.
“All of our specials, discounts and programs like ‘Down Down’, we aim to genuinely provide genuine savings for our customers, and that goes to the heart of customer trust, and it’s something that we take very seriously at Coles,” she said.
Woolworths chief Amanda Bardwell also defended the company against the ACCC’s claims.
“Our ‘prices dropped’ program was introduced to provide our customers with great everyday value on their favourite products,” she said.
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