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Senate Committee releases final report into supermarket pricing

The release of the final report by the Select Committee on Supermarket Prices has sparked significant dialogue among key industry stakeholders and decision-makers.

After the Select Committee on Supermarket Prices released its final report several key industry stakeholders and decisionmakers have spoken on the findings and recommendations.

The Greens-led Senate Select Committee on Supermarket Prices has recommended making price gouging illegal, as well as introducing divestiture laws to create powers to break up Australia’s supermarket duopoly.

“This is a landmark report with serious proposals to tackle the price of food, and the profiteering that has done so much harm to the people of Australia,“ Greens Economic Justice spokesperson and Committee Chair Senator Nick McKim said.

“The committee has produced concrete steps that would tackle these problems head on.”

“Chief amongst these is the recommendation that price gouging be made illegal. This would mean that corporations couldn’t just arbitrarily increase prices without facing consequences from the courts.”

McKim said this move would create significant power to stop unreasonable pricing.

“The committee has also recommended divestiture powers for the supermarket sector, which would give the Federal Court the power to break up corporations when they abuse their market power or act unconscionably,” he added.

The committee’s other recommendations include:

  • The establishment of a Prices and Competition Commission to examine and monitor prices and price setting across the economy and require supermarkets to publish historical pricing data.
  • That the Food and Grocery Code of Conduct be made mandatory with significant penalties for breaches, and be expanded to greenlife industries and any retailer that stocks food and grocery products
  • That the ACCC be given powers to investigate land banking and unfair trading practices.
  • Supermarkets be made to adopt mandatory standards for unit pricing, and notify customers of changes in sizes or prices of products, to help prevent shrinkflation
  • For the Government to standardise discount and promotional terms, to prevent supermarkets promoting fake discounts.
  • For the Government to back stronger health and safety standards for supermarket employees
  • Further investigation of the role of multinational food manufacturers in price increases in Australia
  • That the National Food Waste Strategy is updated to require supermarkets to publish data on food waste and consider whether unrealistic cosmetic standards are adding to waste.

“The committee has heard the devastating evidence on the effects of price gouging and how hard it is hitting people,” said McKim.

“The Greens established this inquiry to bring food prices down and that is exactly what our recommendations will do.”

Australian Food & Grocery Council

The peak body for food and grocery manufacturing in Australia notes the report by the Senate’s select committee on supermarket pricing.

The Committee’s report highlighted the need to strengthen the Food and Grocery Code of Conduct through tougher penalties and the introduction of an independent arbiter. It also underlined the reality and concern over fear of retribution faced by food and grocery manufacturers. This chimes with the review of the Code by Craig Emerson which strengthens protections for suppliers.

“Clearly, the entire food and grocery supply chain, from retailers to suppliers and consumers– remains under pressure,” said AFGC CEO Tanya Barden

“However, we all need to share the costs as well as the benefits equitably without putting any one link in that chain under undue pressure.”

Regarding divestiture powers, the AFGC considers these are potentially premature at this stage given the commitments the government has made the strengthen the merger laws and Food and Grocery Code of Conduct.

Many of the issues raised in the recommendations of the Committee’s report are being looked at by the ACCC’s year-long inquiry.

Pricing arrangements in the industry are complex making the ACCC well placed to take up these matters.

Food, beverage, and grocery manufacturers account for over 270,000 jobs, many of them in rural and regional Australia. The health of the industry and those jobs depends fair practices that generate sufficient profits to justify investment in manufacturing.

AFGC’s submission to the inquiry called for investment incentives that drive manufacturing capability and job creation through boosting the sector’s competitiveness, resilience, and agility.

With regards to multinational companies, AFGC is disappointed that companies were given fewer than 3 business days’ notice to appear in front of the Committee.

As the report notes, the companies have since forwarded their written submissions to the Committee and cooperated with the process. Their submissions are available on the public record.

National Farmers Federation

The National Farmers Federation welcomed the findings of the Greens-led Senate Select Committee on Supermarket Pricing. Image: Budimir Jevtic/ShutterStock

The National Farmers Federation welcomed the release of the final report, highlighting the importance of highlighting the challenges being faced by Australian producers.

“We’ve long argued that the Australian food and grocery supply chain lacks adequate competition,” said NFF president, David Jochinke.

“We see supermarkets and retailers using their market power to harm farmers through lower prices, unfair risk burden and supply uncertainty. This places significant pressure on small, family-run businesses.

“(This) report is another piece of evidence to support the challenges being faced by thousands of Australian farmers, in particular those supplying perishable goods.”

Jochinke said the NFF were still working through the report but welcomed a number of the Committee’s recommendations which closely align with calls from the sector.

“These include making the Food and Grocery Code of Conduct mandatory, extending the Code to cover major retailers of ‘Greenlife’ products, and putting in place significant penalties for breaches,” he said.

“Further, we strongly welcome the report’s recommendations for continued reform of Australia’s mergers framework, and an increase in resourcing and strengthening of powers of the Australian Competition and Consumer Commission.

“These recommendations build on previous reports including the ACCC Perishable Agricultural Goods Inquiry in 2020, creating a clear evidence base for these recommendations to be urgently actioned by Government.”

“There is a Bill before Parliament right now to create divestiture powers. The only thing standing in its way is the Labor Party,” said McKim. 

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