Inquiry calls for crackdown on supermarket price hikes

A GREENS-LED Senate inquiry into supermarket prices has called for price gouging to be made illegal after hearing “devastating evidence” from consumers about the impacts of rising grocery prices.

Greens Senator Penny Allman-Payne said in parliament that the inquiry heard that, in order to get by, people were skipping meals, dumpster diving and eating unhealthy foods.

“For far too long, the big supermarkets have taken advantage of the grossly excessive market power they’ve been allowed to accumulate under successive Labor and Liberal governments,” she said earlier this month.

“This has allowed them to dictate prices and to set terms, raking in billions in excess profits at the expense of suppliers and consumers.”

Greens Senator and committee chair Nick McKim said taking action against price gouging would mean corporations were unable to “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,” he said.

The inquiry has also recommended that divestiture laws be introduced which would allow the Federal Court to break up supermarkets that abuse their market power or engage in unconscionable behaviour.

“We’ve heard from farmers and suppliers about how the massive market power of Coles and Woolworths is allowing them to act unconscionably,” Senator McKim said.

“Without the ability to break up the duopoly, our market will remain skewed towards the interests of a few powerful players and nothing will change.”

While McKim has introduced a bill in the Senate to create these divestiture powers, the federal government has repeatedly rejected the idea and a separate inquiry into the Food and Grocery Code of Conduct by economist and former Labor minister Craig Emerson last month suggested such a move lacked “credibility”.

“If forced divestiture resulted in a supermarket selling some of its stores to another large incumbent supermarket chain, the result could easily be greater market concentration,” Mr Emerson said.

“If large incumbent supermarket chains were prohibited from buying the divested stores, that would leave only smaller supermarket chains and foreign supermarkets as potential buyers.

“If these smaller chains were not interested, or were not in a position to buy, these stores would be forced to close. This would be at the cost of the jobs of the workers in those stores and of inconvenience to local shoppers.”

The Senate inquiry’s calls for the now-voluntary Food and Grocery Code of Conduct to be made mandatory and for supermarkets to face significant penalties for engaging in unfair practices, however, broadly align with recommendations made by Emerson.

The federal government now has just under three months to respond to the recommendations made by the inquiry.