Julia Bradley:
Well Coles’ famous slogan, ‘Down, down, prices are down’, is facing its biggest test yet as a 10-day hearing begins in the Federal Court. The ACCC launching the case over soaring grocery prices – accusing major supermarkets of exploiting their market power during the inflation surge. The watchdog alleges the supermarket misled customers over discounted product promotions.
Coles denies any wrongdoing and the case comes ahead of new regulations to ban excessive supermarket pricing; supermarket pricing coming into effect from July 1. Joining me live now is Andrew Leigh, Assistant Minister for Productivity, Competition, Charities and Treasury. Thank you so much for your company. What do you make of this court case which is now beginning? What could be the outcome of this? What are you expecting?
Andrew Leigh:
Well these are extremely serious allegations being levelled against one of the nation’s biggest retailers. We know our supermarket sector is very concentrated. The big 2 have two‑thirds of the market. And that’s why since we came to office, the Albanese government has set about cracking down on supermarkets, so families and farmers get a fairer deal.
We’ve raised the maximum penalties for anti‑competitive conduct and we’ve given an additional $30 million to the competition watchdog to run cases such as these. As you mentioned Julia, we’re banning price gouging starting from the 1st of July. And we’re also investigating strengthening the unit pricing code to deal with shrinkflation – that problem that happens when the size of the pack shrinks but the price stays the same.
Bradley:
I’ve certainly noticed shrinkflation in supermarkets that’s for sure. When you buy your favourite product and gosh, there’s not much in the pack is there? So in terms of this court case involving the ACCC, does the current economic climate with rising inflation play into the favor of the ACCC against the supermarkets? What are you expecting the context to say about this?
Leigh:
Well I should be careful not to comment on an active court case, given the separation of powers but I do know that many Australian families are under pressure, and that’s why the Albanese government has been so focused on ensuring that we get our supermarket reforms right.
We’ve got a consultation closing tomorrow which is looking at whether or not the supermarkets should be required to post all their prices in‑store and the big supermarkets required to post them online in a way that can be used by price comparison tools, as well as considering whether loyalty programs need to provide a little bit more transparency so that customers know what they’re really getting.
We understand the importance to customers of getting a fair deal at the checkout, and we recognise that the supermarket sector is a big part of the cost‑of‑living pressures that Australians are under.
Bradley:
If Coles successfully defends itself in court, does that mean the near identical case involving Woolworths will also fall that way in favor of the supermarket?
Leigh:
Well, that’ll be a matter for the competition watchdog. I do know that they’re bringing a number of cases, not just these. They’re also focused on issues such as mergers and land acquisitions. There’s been allegations of land banking around, in which the big supermarkets hold on to significant parcels of land, making it harder for alternative supermarkets to break into the market.
And indeed over a decade ago, Kaufland – the international chain of supermarkets, considered coming into the Australian market but decided not to because it couldn’t get enough sites. So that does point to the importance of what we’re doing through national competition policy to ensure that those sites are available. We get more competition where Australians can choose where to shop.
Bradley:
So what ramifications will it have on a wider scale for the millions of other businesses that discount their products? They would be no doubt watching this court case very closely?
Leigh:
All those businesses know they need to avoid misleading and deceptive conduct. They recognise the importance of competition laws, and understand the value of competition laws for delivering better outcomes for consumers and better productivity gains for the economy. The last thing we want Julia, is an economy which is run by a few big firms in which we see increased markups and increased market concentration.
But in fact, that’s exactly what we saw under the former Coalition government. That’s why the merger reforms that we’ve put in place, which kicked in from the first of January this year are really important. The biggest shake‑up to our merger laws in 50 years. And it’s why we’ve revitalised national competition policy with Treasurer Chalmers putting on the table a $900 million productivity fund so we can work with the states to get those productivity gains like they did in the 1990s.
Those reforms put about $5,000 into the pockets of the typical Australian household. We’re ambitious for the reforms we’re putting in place with national competition policy today.
Bradley:
Okay so talk to me about the Albanese government’s crackdown on unfair trading practices, including hidden transaction fees and subscription traps. What does this plan specifically target? Which businesses would be impacted?
Leigh:
It’ll be economy‑wide. Unfair trading practices are banned in other jurisdictions but not here. We’re cracking down on subscription traps because we believe it should be as easy to cancel a subscription as it was to sign up. An Australian shouldn’t be put in the invidious position of having to cancel a credit card because it turns out to be too much of a pain to cancel the subscriptions that are coming out of it every month.
In the case of drip pricing, the rule is simple. Just tell customers the full price they’ll pay. If there’s a mandatory per‑transaction fee, then you need to disclose it at the outset rather than hiding it till the final screen. These reforms again, are about putting power into the hands of consumers and ensuring the competition is happening on a level playing field. And so that competitors who are already doing the right thing aren’t competing with one hand tied behind their back because other competitors are looking to pull a swifty over their customers.
Bradley:
Okay so what about global brands like Uber Eats? I’ve really noticed that their fees are increasing rapidly, it seems to me, since they first got into the Australian market. So, how do these reforms impact those bigger global businesses?
Leigh:
If you’re selling goods and services to Australians, you’re covered by Australian competition law. And so, consumers should be confident that we are putting in place reforms which don’t just apply to corner stores, but also apply to big multinationals. Australia’s benefited from some of those big firms bringing in their economies of scale. But there’s no end run around our competition laws.
And under Labor we’ve looked to strengthen those competition laws to get a more dynamic and productive economy. Competition is one of the best ways we can deliver cost‑of‑living relief to Australians. We are doing a lot through the budget, but we can only do so much with the budget. By putting in place a more dynamic and competitive economy, we get better outcomes for consumers and better outcomes for the whole economy, which means more jobs and faster growth.
Bradley:
Andrew Leigh, thank you so much for your time. Talk again soon.
Leigh:
Thanks so much Julia.