ANDREW LEIGH:
Thanks very much everyone for coming along today. My name’s Andrew Leigh, Assistant Minister for Competition, Charities, Treasury and Employment.
The Albanese government wants to see a fair deal for families and a fair deal for farmers. That’s why we’re doing all we can to ensure that the supermarket sector is held to account. Today, I’m pleased to be releasing the ACCC’s interim supermarkets report. This is the first deep dive into the supermarkets that the competition watchdog has done in 16 years. The report received some 80 submissions and the public survey that was opened received over 20,000 responses from the Australian public. That’s the biggest response to any survey that the ACCC has ever done, and it reflects the very strong concern among Australians about supermarket pricing and about farmers getting a fair deal.
The report goes to a range of important issues within the supermarket sector. It identifies that Coles and Woolworths together have a 67 per cent market share, higher than in many countries.
It points to the challenge of loyalty programs and the way in which they can affect consumers’ ability to shop around. It notes that in some case cases, discounting practises can be opaque, and we’ve seen this week the ACCC bringing actions against Coles and Woolworths for what it says is misleading practises in temporarily raising prices and then claiming it was offering a discount when it lowered them just a little bit.
We’re also seeing this report concerns about land banking, about the major supermarkets oversupplying certain areas in order to deliberately keep out competition. The report points out that since the ACCC lasted at supermarkets inquiry in 2008, we’ve seen the introduction of Costco and the expansion of ALDI. But it also notes that Kaufland, which attempted to enter the market, eventually decided not to proceed with that expansion and says that that was a loss for Australian consumers who would have benefited from more competition within the grocery sector.
It’s important the ACCC interim report also notes the impact on low‑income consumers. It observes that low‑income consumers pay a higher share of their income on groceries, so making sure that they get a fair deal has got to be a big priority. It notes the impact on remote consumers are observing that in regional areas there can often be much less choice among supermarkets, with the result that shoppers pay higher prices.
We’ve seen that through the release of the CHOICE quarterly price monitoring yesterday. CHOICE noted the prices between ALDI, Coles and Woolworths tended to put ALDI as the cheapest supermarket, but for shoppers in the Northern Territory and Tasmania, where there’s no ALDI, they end up paying higher grocery prices.
The report notes, too, that grocery price inflation has exceeded all overall price inflation over the period from 2019 through the June 2024. That’s important because Australians are feeling the squeeze. And to see in this report, evidence that grocery prices are going up faster than prices in the economy as a whole is of significant concern.
The Albanese government is acting. We’ve commissioned this once in 16 years report, we’ve announced the food and grocery code will be made into a mandatory code, not the toothless voluntary code that it was under the Liberals and Nationals. We’ve got the exposure draft of that out this week.
We’re doing the quarterly price monitoring through CHOICE, providing information to Australian consumers about where to get the best deal.
We’re tasking the competition task force with doing work on mergers. The biggest shake up of mergers in 50 years, alongside their work on non‑compete clauses and on national competition policy.
We understand how important competition is for families, for farmers, for the broader economy. A competitive economy, a dynamic economy produces productivity growth that flows through to household income growth and wages. Competition is good for consumers, good for workers, and good for the economy. The Albanese government wants Australia to have more of it.
After we saw rising market concentration and growing markups under the Liberals and Nationals, we’re getting on with the job of making the Australian economy more dynamic and more competitive, with a particular focus this week on the supermarket sector.
Very happy to take questions.
JOURNALIST:
Does this report give weight to calls for divestiture powers?
LEIGH:
We don’t see other countries engaging in breaking up supermarkets and the Albanese government doesn’t see that as being a primary solution in this instance. Divestiture powers exist in some countries, not in others. Australia has it in the energy sector, but not more broadly. But even when they exist, they’re very rarely used. In the United States, you’ve got to go back generations to get to the Bell break up, the most recently attempted breakup of Microsoft ended up not going ahead. So, there’s little point adding a tool to the competition armoury, which isn’t going to be used.
JOURNALIST:
But the tools so far aren’t working. The CHOICE report yesterday showed the prices between Coles and Woollies have hardly changed in the 3 months, Woollies basket has actually gone up by $4.00, so surely you should be adding more tools to the toolbox.
LEIGH:
Well, the point of providing pricing information is to encourage consumers to get the best deal. If I tell you that a car is cheaper at this dealership, than this other dealership, you’ve gotten a benefit from that. Yes, there’s a double benefit that comes if we also see price effects at those dealerships. But by informing consumers, we ensure that people save money at the checkout and we’re very proud of having done that.
JOURNALIST:
Is divestiture completely off the table, given this report has found that Coles and Woollies are an oligopoly?
LEIGH:
Look, we don’t see the evidence being particularly strong for divestiture having a positive impact on consumers. We do know it would have a chilling effect on investment and potentially that that could lead to an adverse impact. When we look around the world, we don’t see other countries breaking up their supermarkets. What Labor wants to ensure is that we get better information into the hands of consumers, we hold supermarkets to account, and we encourage greater competition from potential players in Australia and overseas.
JOURNALIST:
How would you characterise the 2 major supermarkets at the moment and their conduct?
LEIGH:
Well, the allegations that have been raised by the ACCC this week are deeply disturbing. The suggestion, for example, that a pack of Oreos was briefly raised from $3.50 up to $5.00, then dropped down to $4.50 and advertised as a discount. Well, that doesn’t seem to pass the reasonableness test. We’ve seen these allegations covering more than 500 products and millions of dollars would have been spent by Australians on those products. So yes, the Coles and Woolworths are being held to account. The next stage for the ACCC report will be a series of public hearings involving executives from the major supermarkets in October and November.
We’re encouraging Australians to come forward and offer any submissions they have on the interim report. We are very keen to hear from all Australians on this important report. It’s the first report to do a deep dive by the ACCC and of the supermarket sector in 16 years.
JOURNALIST:
When you talk about knowledge being power, Australians aren’t stupid, they know that the sale tickets are dubious. They are wary about signing up for fly buys, but is the fact is there is nowhere else to go in many circumstances. I mean, you pointed out regional Australia, that in many suburbs, there would only be a Coles or Woollies, are we disadvantaging or are Australians disadvantaged because they would have to drive longer distances to get to an ALDI or Costco in order to have that option, going further to the divestiture question?
LEIGH:
Yeah, it certainly pays to shop around. And one of the interesting things the report finds is where the ALDI stores are located. It finds the average ALDI store is located within 400 metres of a Coles or Woolworths. So, ALDI itself is locating in a way of encouraging more supermarket competition and the benefits that consumers can gain are reflected in the CHOICE quarterly price monitoring reports.
We need to hold the supermarkets to account, make no mistake. The report talks about the phenomenon of shrinkflation about the way in which everything from Tim Tams to Freddo Frogs seems to be getting smaller while the price is held the same. The Albanese government is committed to providing the regulator with the tools it needs in order to provide the best deal for Australian consumers, and we’re committed to making the food and grocery code of conduct a mandatory code, so our fabulous farmers get a fair deal in their negotiations with the supermarkets.
JOURNALIST:
To follow up on that, I think most Australians know that ALDI is cheaper. I think they know that Coles and Woolworths have broadly the same prices. So, your kind of telling people what they already know in this sense. If divestiture isn’t the tool and the toolkit that you need, what are the concrete actions that will actually lead some change, lead some benefits in this area? Obviously, you listed all the points about making the code mandatory and so forth, but what concrete actions can actually be taking here or are there none that you can physically take?
LEIGH:
Well, the report goes to not only who’s the cheapest, but the CHOICE price monitoring actually goes to the price of the basket. So, for Australian shoppers who are busy and who might need to spend a bit more time to engage in shopping around multiple supermarkets, they have that direct information as to how much you can save by going to different supermarkets. So, the numbers matter, as well as just the rankings.
We’re ensuring that shoppers have information in their hands and the final report will make a set of recommendations going to a range of the issues that I’ve discussed this morning. Loyalty programs, the accuracy of promotions, the way in which land banking is happening or not. All of these are important issues for Australian consumers and the way in which the Albanese government has been acting on competition affects supermarket as well. One of the first things we did after we came to office was raise the penalties for anti‑competitive conduct and that will directly affect the action that the ACCC has brought this week against Coles and Woolworths, if they are found to be liable. So higher penalties, banning unfair contract terms, a Competition Taskforce that’s delivering a merger shake up, all of these are about putting more information and power in the hands of consumers and ensuring that our families and farmers get a fair deal.
JOURNALIST:
Wayne Swan said today that the way supermarkets have been behaving with their price gouging, has actually pushed up inflation. Do does the government believe that those price gouging has had an impact on the nation’s inflation rate?
LEIGH:
I need to be careful because these are allegations that are before the courts and the last thing I’d want to do is to prejudice that. If these allegations were found to have been correct, it would mean that Australians were paying more than they should have been, and evidently that has an impact on inflation.
JOURNALIST:
Can I just ask you on another issue? It’s the AFL grand final tomorrow, good red tie – go Swannies, but there will obviously be a lot of gambling ads feeding into the lounge rooms of Australians, has the government’s lack of or, I guess delay in acting on the gambling report, meant that there are going to be more gambling ads themed into the lounge rooms of Australians then there should be?
LEIGH:
I need to pay credit to Michelle Rowland, who is doing more to address gambling in sport than any minister or any government has done before. We are taking significant actions to curb gambling advertising. We understand that Australians need to watch sport for the joy of the footy, not for taking a punt, and so the measures that the government has taken are really substantial and will curb the way in which sports gambling has intruded. I do want to pay tribute again as we so often have, to our late colleague Peta Murphy, who led this work through her chairing of the parliamentary committee report and whose work has underpinned what the governments done in this area.
JOURNALIST:
When will we see the (inaudible) report?
LEIGH:
Well, the Minister has announced what the government is doing. Naturally, we always consult on this and so we’re in that consultation phase now, but we’re taking stronger action on curbing gambling than any Australian Government before us.
Thanks everyone.