Supermarkets Face Scrutiny Amid Cost-of-Living Crisis
A Senate inquiry has called for hefty fines against major supermarkets found to mistreat suppliers, as part of a broader investigation into the rising cost of food. However, the committee was divided on the more controversial issue of breaking up supermarket monopolies.
Greens Senator Nick McKim, who chairs the committee, highlighted the "massive market power" of Coles and Woolworths, which he claims allows them to act unfairly towards suppliers. Labor has rejected calls for divestiture powers, while the Coalition senators expressed reservations.
The inquiry also recommended making price gouging illegal, strengthening the ACCC's powers to investigate unfair trading, and establishing a prices and competition commission. However, the only recommendation unanimously supported was to make the existing code of conduct regulating the relationship between supermarkets and suppliers mandatory.
This call aligns with the interim recommendation of a separate inquiry led by former cabinet minister Craig Emerson, suggesting broad support for the change. The current voluntary code, developed in response to public anger over supplier treatment, lacks any penalty for breaches.
Emerson's final report, due in June, proposes a mandatory code with penalties as high as 10% of a company's annual revenue. The highly concentrated supermarket sector, dominated by Coles and Woolworths, has long been criticized for squeezing suppliers on prices.
The National Farmers Federation urged the government to act on the code of conduct, but emphasized the need for a "tough cop" in the form of a well-resourced ACCC. The committee's report echoes concerns raised by growers about predatory pricing practices and fear of retribution.
Treasurer Jim Chalmers acknowledged the government's efforts to enhance competition in the supermarket sector, including strengthening the code of conduct and reforming merger regulations. He emphasized the need for fairness for both families and farmers, recognizing the significant impact of rising food costs on consumers.
The Senate committee's investigation included questioning the CEOs of Australia's major grocery chains. Notably, the committee threatened outgoing Woolworths CEO Brad Banducci with contempt for refusing to provide information about the company's profits. The committee ultimately received the information and decided not to pursue the matter further.