A year-long inquiry into Australia’s supermarkets has found Coles and Woolworths are some of the world’s most profitable grocery retailers, while not accusing the supermarkets giants of price gouging.
The peak consumer watchdog, the Australian Consumer and Competition Commission (ACCC), recommended 20 ways to improve competition and transparency.
Coles and Woolworths make up two-thirds of the supermarket sector, which the ACCC says creates “limited incentive to compete vigorously on price”.
Inquiry
In January 2024, the Federal Government ordered the ACCC to set up an inquiry into Australia’s supermarket sector.
It followed growing public pressure to investigate alleged ‘price gouging’ — deliberately and unnecessarily inflating a product’s cost.
The ACCC held 10 public hearings, where the major supermarkets appeared, and received more than 100 public submissions, and 20,000 responses to its consumer survey.
Supermarkets
The ACCC’s final report found Australia’s supermarket sector is “highly concentrated, with an oligopoly structure”. An oligopoly describes a situation where there’s limited competition.
The ACCC found Australia’s market is dominated by Coles and Woolworths, which make up 67% of the grocery industry.
In countries like the U.S. and UK, supermarket chains engage in informal “price wars,” where competition keeps costs low.
Profits
The ACCC noted Coles and Woolworths are two of “the most profitable supermarket businesses among their global peers”.
It added that “consistently high profits” showed there is more room for competition in the sector.
The latest half-year updates showed Coles reporting a profit of $576 million in the six months to December, while Woolworths recorded a $739 profit in the same period. Both companies reported lower profits compared to the 2024 half-yearly results.
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Price increases
Owing to their market dominance, the ACCC found Coles and Woolworths have “limited incentive to compete vigorously with each other on price.”
Official data shows grocery prices have risen by 24% over the past five years. Some of the largest increases hit eggs (47%), milk (34%), and bread (32%).
The report notably did not accuse Australia’s supermarkets of price gouging, which was a key accusation from some consumer and farmer groups.
Recommendations
The ACCC made 20 recommendations to improve Australia’s supermarket industry.
It suggested supermarkets should have “record-keeping obligations” on discounts, to avoid misleading customers when they promote a special or sale.
“Through clearer sales tickets and promotions, consumers will be better placed to make more informed decisions about what products offer the best value for them at the checkout,” ACCC Deputy Chair, Mick Keogh, said.
Response
Woolworths Group CEO Amanda Bardwell argued the “Australian grocery sector is very competitive”.
She welcomed some of the recommendations for improving transparency.
In a statement, Coles also argued that the “grocery sector is highly competitive,” rejecting suggestions the company dominates Australia’s supermarket sector.
Treasurer Jim Chalmers told the ABC the ACCC report showed the need for “more scrutiny, more information and more competition… There are things that we are doing to crack down on the supermarkets.”
Nationals leader David Littleproud criticised the inquiry, saying it “asks for more transparency and reporting but fails to understand if there’s not a consequence for doing the wrong thing, then it’s just business-as-usual for the big supermarkets.”
He said the Coalition would impose $2-10 million fines for supermarkets found to have breached fair price rules, if it wins the next election (due by 17 May).
