Sunita Somvanshi
The Australian Competition and Consumer Commission (ACCC) has released its final 441-page report on the supermarket sector, revealing that Australian supermarkets—particularly Coles, Woolworths, and ALDI—rank among the most profitable globally. The report comes after a year-long investigation that included public and private hearings, consumer surveys, and analysis of billions of data points.
Key Findings on Profitability and Competition
According to the report, Coles and Woolworths collectively dominate 67% of national grocery sales, with ALDI holding 9% and Metcash-supplied supermarkets at 7%. This market structure creates what the ACCC describes as an “oligopoly,” where limited competition has led to higher prices and fewer choices for consumers.
“Aspects of Australia’s supermarket sector, which is dominated by Coles and Woolworths, are not working well and this is leading to poorer outcomes for consumers and suppliers than would be expected in a more competitive market,” said ACCC Deputy Chair Mick Keogh.
The report found that food and grocery prices have increased by approximately 24% since March 2019. While rising input costs explain part of this increase, the ACCC noted that “ALDI, Coles and Woolworths have increased their product and profit margins during this time, meaning that at least some of the grocery price increases have resulted in additional profits.”
Recommendations for Reform
The ACCC made 20 recommendations focused on improving competition, transparency, and outcomes for both consumers and suppliers. These include:
- Enhanced Price Transparency: Requiring ALDI, Coles, and Woolworths to publish prices online and make this data available to third-party comparison tools.
- Clearer Promotions and Pricing: Implementing minimum information requirements for discount price promotions and notification requirements for “shrinkflation” (when product sizes decrease while prices remain the same or increase).
- Planning and Zoning Reforms: Simplifying and harmonizing planning and zoning laws to make it easier for competitors to establish new supermarkets.
- Support for Remote Areas: Considering government support for community-owned stores in areas with limited supermarket choices, particularly remote locations.
- Supplier Protections: Requiring supermarkets to provide fresh produce suppliers with detailed information about supply forecasts and greater transparency in negotiations.
Treasurer Jim Chalmers said the government has accepted all 20 recommendations in principle. “This is about ensuring Australians aren’t treated like mugs by the supermarkets,” Chalmers stated.
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Impact on Suppliers
The report highlighted a significant bargaining power imbalance between the major supermarkets and their suppliers. Many suppliers expressed fear of retribution if they raised concerns directly with the supermarkets.
Assistant Minister for Competition, Andrew Leigh, noted the findings were “grim reading” and emphasized the need for reform: “Shrink-flation, sneaky prices, unfair deals – we’re tackling those head on. We are working hard to secure a fairer deal for farmers and a fairer deal for families.”
As part of its initial response, the government has announced $2.9 million in funding over three years for education programs to help suppliers understand their rights when dealing with supermarkets.
Supermarket Responses
In response to the report, Coles stated it welcomes greater transparency but warned against measures that could increase red tape and drive up costs. Similarly, Woolworths CEO Amanda Bardwell welcomed recommendations that improved transparency for customers but cautioned against actions with “unintended consequences.”
Bea Sherwood, Senior Campaigns and Policy Advisor for consumer advocacy group Choice, countered these concerns: “If there is a risk of increased costs, I would say that that is hopefully a cost the supermarkets can absorb.”
The report did not recommend divestiture powers or breaking up the supermarkets, despite some calls for such measures. It did, however, note that the recently passed merger reform laws will assist the ACCC in scrutinizing acquisitions by the major supermarkets, which have acquired approximately 260 sites between them since 2019, with the ACCC only notified of 14 of these acquisitions.
