The head of the competition and consumer regulator still has “high concerns” about the pricing practices of Australia’s dominant supermarkets even after they were subjected to litigation and intense public scrutiny.
Gina Cass-Gottlieb, the Australian Competition and Consumer Commission chair, also said regulations may need to be bolstered to combat complaints raised by shoppers and suppliers exposed to a highly concentrated sector led by Coles and Woolworths.
The ACCC is due to hand its final report into the supermarket sector to the government by the end of February, after earlier raising concerns that the “oligopolistic” market may limit incentives to compete vigorously.
It is separately suing Coles and Woolworths over allegations they misled shoppers by offering “illusory” discounts on hundreds of common supermarket products.
The supermarkets are defending the legal claims and have consistently denied allegations they abuse their market power by price-gouging consumers and driving down prices on agricultural suppliers.
“We continue to be very concerned about it,” said Cass-Gottlieb, in response to questions about whether the supermarkets had improved their practices.
“The best answer on an interim basis today is we continue to have high concerns and we will give a very extensive report to the government quite soon.
“In addition there is a question whether the current regulations go far enough.”
Shrinking products
Guardian Australia recently detailed an example of Woolworths selling a significantly smaller stick of Brut deodorant for more than double the unit price of the old product, months after similar practices were criticised at the ACCC’s public hearings.
Bryce New of New South Wales supplied another example of “shrinkflation”, whereby the cost of a loaf of bread, per gram, had gone up markedly after Coles reduced its size.
New, who said he almost exclusively shopped at Coles, said the supermarket stopped selling its 680g “traditional white” gluten-free loaves, priced at $7, in December.
He said that bread had been the most affordable gluten-free option, and he was “deeply saddened by the loss to the gluten-free and coeliac communities”.
New said Coles relaunched the bread in 440g loaves, for $6.25, which meant the price per gram had gone up by 38%.
A Coles spokesperson said the new loaves were lighter due to “innovative techniques” and a “new formulation” and that they were “of a superior quality for our customers”.
“The new formulation is less dense which more closely mimics dough formulations similar to gluten-based bread,” the spokesperson said.
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Woolworths said it had made similar changes to its own-brand gluten-free bread. A spokesperson said the company had switched suppliers and was “using a new recipe to offer a lighter, less dense bread which is closer to the consistency of traditional wheat-based breads”.
The changes were based on feedback from customers, they said.
Living costs
Cass-Gottlieb’s critique of the supermarkets was made ahead of a speech due to be delivered on Thursday detailing the ACCC’s compliance and enforcement priorities.
The regulator will tell the Committee for Economic Development of Australia it will focus on sectors and conduct that have a significant impact on cost of living.
“Market concentration is a growing challenge across the Australian economy – in supermarkets and retail, in aviation, and in many of our essential services,” Cass-Gottlieb will say.
Last year, the federal government allocated $30m to the competition regulator for dedicated investigations and enforcement activities in the supermarket and broader retail sector.
The funding was provided during a period of fast-rising living costs that especially affected lower-income earners, given a greater portion of their budget goes to essential items.
The ACCC has welcomed a new merger regime that comes into force at the start of 2026 that should prevent companies buying up rivals with limited scrutiny.
From next year, companies will be required to notify the regulator of mergers of a certain size in a major revamp of competition laws designed to reduce unfair market concentration.
