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Consumer watchdog welcomes inquiry into Australian supermarkets

The ACCC has welcomed the announcement by the Australian Government that it will direct the ACCC to conduct an inquiry into Australia’s supermarket sector, including the pricing practices of the supermarkets and the relationship between wholesale, including farmgate, and retail prices.

The year-long inquiry will also examine competition in the supermarket sector and how it has changed since the ACCC’s last inquiry, which was conducted in 2008.

“We know grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures,” said ACCC chair Gina
Cass-Gottlieb.

“When it comes to fresh produce, we understand that many farmers are concerned about weak correlation between the price they receive for their produce and the price consumers pay at the checkout.”

“We will use our full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to Government,” Ms Cass-Gottlieb said.

Following the ACCC’s 2008 inquiry, Coles and Woolworths provided enforceable undertakings to the ACCC to remove restrictive tenancy provisions that may have prevented shopping centres from leasing space to competing supermarkets. The ACCC’s investigation identified more than 700 potentially restrictive leases.

“Competitive markets encourage more attractive combinations of price and quality for consumers, as well as greater choice,” ACCC deputy chair Mick Keogh said.

“Our inquiry will examine the nature of the current competitive environment between supermarkets, as well as the barriers to greater competition and new entry in the sector.”

“We believe we are well placed to conduct this broad-ranging inquiry and will bring to bear our expertise in competition, consumer law, agriculture and the supermarket sector in particular,” said Keogh.

The inquiry will also look at any emerging issues related to more recent trends, including online shopping, changes in technology, and loyalty programs.

The ACCC expects to publish an issues paper in February seeking views on the key issues it will consider in this inquiry. An interim report will be provided to the Australian Government later this year, and the final report is due to be provided early next year.

The ACCC will publish the formal direction from the Australian Government, including the terms of reference, when it receives it.

Under Part VIIA of the Competition and Consumer Act, the Treasurer can direct the ACCC to hold a price inquiry into a particular matter.

Such an inquiry allows the ACCC to use its compulsory information-gathering powers to collect information from the relevant parties subject to
the inquiry.

The ACCC’s inquiry into the supermarket sector is separate to the Government’s recently announced review of the Food and Grocery Code of Conduct, which relates to the conduct of retailers and wholesalers towards suppliers.

The ACCC currently has a role in promoting compliance with the voluntary Food and Grocery Code and will be actively contributing to this review of the Code.

The ACCC recently indicated that it has been closely considering reports from consumers alleging false or misleading “was/now” or other pricing “specials” advertised by the supermarkets, and whether they may raise concerns under the Australian Consumer Law.

The ACCC’s assessments are ongoing and are entirely separate from this new inquiry into Australia’s supermarket sector.

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