Australia to Enforce New Food Pricing Rules in Crackdown on Coles and Woolworths

Coles Group Ltd. and Woolworths Group Ltd., Australia’s dominant supermarket chains, are bracing for tougher oversight after the government moved to crack down on alleged price gouging.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Coles Group Ltd. and Woolworths Group Ltd., Australia’s dominant supermarket chains, are bracing for tougher oversight after the government moved to crack down on alleged price gouging. Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.New regulations banning excessive pricing of consumer goods in the Food and Grocery Code come into effect on July 1 and are meant to help “Australians get a better deal at the checkout” during a period of elevated living costs, Treasurer Jim Chalmers said Sunday.The legislation represents the most significant escalation in supermarket regulation in years and comes amid intensifying public anger over food-price inflation and the industry’s strong profitability. Coles and Woolworths control about two-thirds of Australia’s grocery market, leaving them more exposed to any new pricing or compliance requirements than smaller rivals. Industry pushback has been swift. Coles and Woolworths warned in confidential submissions to the Treasury Department that the proposed rules could increase costs and ultimately lead to higher prices for shoppers, according to the Australian Financial Review. Woolworths said it may need dedicated staff to monitor whether thousands of weekly price changes comply with the new standards, while Coles cautioned that fresh-produce pricing could become more volatile and make planning harder for farmers, the AFR reported.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Over the weekend, Coles said it’s committed to easing pressure on shoppers, noting that multiple inquiries, including the competition regulator’s own, “found no evidence of price gouging.” Woolworths said average prices in its food retail business have declined for seven straight quarters, and the law is “unprecedented” in targeting only two Australian-owned companies, while “much larger, foreign-owned retailers” wouldn’t face equivalent restrictions.Shares of Coles have climbed 15.4% this year, while Woolworths is down 3.1%. That compares with a 6.6% gain in the benchmark S&P/ASX 200 index.An inquiry by the competition regulator earlier this year found the industry is highly concentrated and that dominant chains have limited incentive to compete aggressively on prices, reinforcing concerns that households lack meaningful alternatives.The code will target behavior that leaves consumers paying more than is justified by retailers’ costs. Industry groups argue the new measures are not backed by evidence and could increase compliance costs without clear benefits, pointing to a competition inquiry that did not find clear evidence of excessive pricing by supermarkets.The Australian Competition and Consumer Commission “did not find that supermarkets are driving inflation,” said Bran Black, chief executive of the Business Council of Australia. “The ACCC identified higher energy, freight, labour, insurance and production costs as the key pressures on grocery prices across the entire supply chain.”Cash MandateThe government also confirmed a cash-acceptance mandate that will require supermarkets and fuel retailers to accept physical currency between 7 a.m. and 9 p.m., with small businesses exempt. “This is about making it easier for people to use cash to buy essentials,” Chalmers told reporters Sunday.The mandate may require large retailers to maintain cash-handling capacity even as they automate checkouts and shift toward digital payments, potentially adding labor and security costs.Australia’s food and non-alcoholic beverage prices rose 3.2% in the year through October, compared with 3.8% for headline inflation, according to the government’s statistics bureau. The squeeze on household budgets is also reflected in recent research from The Salvation Army, which found almost half of Australians are worried about affording Christmas this year and that millions expect to go without essentials to make ends meet.Coles and Woolworths have continued to post solid earnings through the inflation cycle, prompting questions from lawmakers about whether the chains have benefited from their market power. Coles’ adjusted net income is forecast to rise 18% to A$1.27 billion in the year ending June 30, 2026, according to analyst estimates compiled by Bloomberg, while Woolworths’ is expected to increase 15% to A$1.57 billion over the same period.Both companies have said they have absorbed rising supplier costs and offered discounts to ease pressure on customers. Chalmers described the measures as part of a broader push to deliver on consumer-focused commitments in 2025. “It’s about delivering on our commitment to crack down on price gouging by the major supermarkets,” he told Sky News Australia. Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.