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Insight of the Day: Yes, Australia’s big supermarkets have been price gouging. But fixing the problem won’t be easy

Key Findings:

  • Price Gouging: The committee concludes that Coles and Woolworths engage in price gouging, exploiting their market dominance to set prices unfairly high.

  • Imbalance of Power: The report highlights the significant power the supermarket giants hold, negatively impacting suppliers, consumers, and overall best practices.

  • Recommendations: The report includes several major recommendations focused on:

  • Making price gouging explicitly illegal.

  • Strengthening and expanding the powers of the ACCC (competition regulator).

  • Establishing a new "Prices and Competition Commission"

  • Introducing "divestiture powers" allowing courts to break up companies with excessive market power

  • Making the Food and Grocery Code of Conduct mandatory to protect suppliers.

Challenges and Uncertainties

  • Government Stance: The Labor government rejects many key recommendations, particularly those significantly expanding regulatory powers.

  • Potential for Short-Term Relief:  Consumers are unlikely to see immediate price decreases due to the complexity of proposed changes.

  • The Future of the Greens' Bill: There's some support for the Greens' bill aimed at introducing divestiture powers, though it currently lacks widespread backing.

  • Lack of Consensus: The Coalition believes the report missed opportunities to address deeper structural issues, highlighting a lack of unified approach to the problem.

The Bottom Line

While the report exposes significant problems in the food system and offers potential solutions, there's no easy fix:

  • It calls for substantial regulatory changes that may take a long time to implement.

  • Political disagreements on the best approach may hinder progress.

  • The fundamental power imbalances between supermarkets and suppliers need to be tackled for lasting, positive changes for consumers.


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