ACCC supermarket inquiry interim report delivered

The ACCC, halfway through its 12-month Supermarket Inquiry, has released its interim report. With 81 submissions, seven roundtables, and 21,481 responses to its consumer survey (the most ever received), the commission said it had identified “a number of key issues” that will be scrutinised in the final report. 

The commission said many consumers and grocery suppliers said they were concerned some supermarket retailers had “considerable market power” and were engaging in practices that disadvantaged customers and suppliers.

ACCC deputy chair, Mick Keogh, said supermarket retailing in Australia was an oligopoly. Woolworths and Coles account for 67 per cent of supermarket retail sales nationally, Aldi accounts for nine per cent and Metcash supplied independent supermarkets seven per cent.

“Oligopolistic market structures can limit incentives to compete vigorously on price. We see Woolworths and Coles providing a broadly similar experience to customers through largely undifferentiated product ranges, pricing at similar levels and similar non-price offerings including loyalty programs,” Keogh said.

He said the inquiry heard how grocery prices were one key contributor to the rising cost of living and were front of mind for consumers.

“The price of a typical basket of groceries has increased by more than 20 per cent in the past five years,” Keogh said.

The ACCC’s consumer survey indicated most respondents in low-income households are spending more than 20 per cent of their net income on groceries.

“We have observed that food price growth in the last five years is largely in-line with inflation in other goods and services, and that food price inflation is lower in Australia than in most OECD countries.

“However, we will look very closely at the extent to which any market power held by the supermarkets has a role in increasing prices to consumers or decreasing prices to suppliers.

“During the remaining five months of our Inquiry we will scrutinise whether, and if so how, the supermarkets may be using market power and the economic implications this has for Australian consumers and suppliers.

“We will examine whether supermarkets are exercising market power to increase retail prices more than is necessary to accommodate increases in the wholesale prices supermarkets pay.

“We are also examining whether supermarkets are engaging in other business practices that may cause detriment to consumers or suppliers,” Keogh said.

Read the interim report here.