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Competition & EU law insights

Keeping you up to date on Competition & EU law developments in Europe and beyond.

| 3 minutes read

Mop to aisle 4: Australia’s supermarket sector faces cleanup

With cost of living pressures remaining a hot-button issue, the Federal Government has responded by directing the Australian Competition and Consumer Commission (ACCC) to launch an inquiry into pricing practices and competition in the supermarket sector (ACCC Inquiry).

This is latest in a string of reviews into the sector, including an inquiry initiated by the Senate, and a separate review of the Food and Grocery Code of Conduct under the Competition and Consumer Act (CCA). The ACCC Inquiry also arrives against the backdrop of number of state-level inquiries and a recent probe commissioned by the Australian Council of Trade Unions.

ACCC Inquiry

On 25 January 2024, the Federal Government gave the ACCC the green light to conduct a year-long inquiry into pricing practices and competition in the supermarket sector. While the ACCC has limited powers in relation to complaints of excessive pricing, it can investigate false or misleading claims about prices including the reasons for price increases and anticompetitive conduct that contravenes the prohibitions in Part IV of the Competition and Consumer Act. The Federal Government has also indicated that it is willing to provide greater powers to the ACCC should it be determined that the existing competition and consumer law toolkit is inadequate.

ACCC Chairperson Gina Cass-Gottlieb has recognised that grocery prices are a serious concern for Australians, and that farmers are worried about the “weak correlation” between prices farmers receive for their goods and the cost of goods at checkout.[1] Cass-Gottlieb indicated that the ACCC will use its “full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to Government.”[2]

The terms of reference for the ACCC Inquiry are set out in a Ministerial Direction published on 1 February. The matters to be taken into consideration in the inquiry are: 

  • the structure of the markets for the supply of groceries by suppliers, wholesalers and retailers, including:
    • the nature and level of competition at each of these levels (e.g. wholesalers and retailers); and
    • relationships between parties at different levels of each of the markets; and
    • the competitiveness of small and independent retailers; and
    • the impact of technological change (e.g. the growth of online shopping); and
  • the approach of suppliers, wholesalers, and retailers to setting prices for groceries;
  • factors affecting the price inputs along the supply chain for groceries, including:
    • any impediments to the efficient availability and pricing of outputs along the supplicant; and
    • any difference between prices paid and prices charged by suppliers, wholesalers and retailers for groceries; and 
  • non-price aspects of competition in the markets for groceries, including the impact of:
    • loyalty programs; and 
    • discounts offered by retailers for future purchases.

An interim report will be provided to the Australian Government no later than 31 August 2024 and the final report is due by 28 February 2025.

Senate Inquiry 

The ACCC Inquiry is not the only federal-level investigation into these fresh food giants. On 6 December 2023, the Senate resolved to create the Select Committee on Supermarket Prices which is to inquire into the price setting practices and market power of major supermarkets (Senate Inquiry).

The Senate Inquiry will examine the contribution of home brand products to the concentration of corporate power, as well as potential frameworks to protect suppliers when interacting with major supermarkets, price mark-ups, and other issues which are set out here.

The committee will present its final report by 7 May 2024. 

Food and Grocery Code of Conduct Review 

Lastly, 2024 will also see the review of the Food and Grocery Code of Conduct (FGCC), a voluntary code which is periodically reviewed to ensure that it remains fit for purpose. 

The FGCC was originally introduced to address the imbalance of bargaining power between supermarkets and their suppliers. Its objectives include ensuring transparency and certainty in the commercial dealings between retailers, wholesalers and suppliers and providing a fair and equitable dispute resolution process.

The review will have regard to whether the FGCC:

  • improves commercial relations between grocery retailers, wholesalers and suppliers;
  • should be extended to other retailers or wholesalers operating in the food and grocery sector;
  • should be mandatory; and
  • should include civil penalty provisions. 

The FGCC is a voluntary code under the CCA which creates rights and responsibilities for its signatories, including an obligation of good faith. The report will detail whether the FGCC is still capable of meeting its objectives and will make recommendations as to whether it should be made mandatory or remain voluntary.

Submissions to this review close at the end of the month on 29 February 2024, with the final report due 30 June 2024.

Opportunities for public submissions 

Should you wish to discuss the review of the FGCC and/or the ACCC Inquiry, or require assistance in making a submission, please contact a member of our team.

This article was written with assistance from Ruby Simpson.

If you need more information or further guidance in this area, please contact Thomas JonesMatthew Bovaird, or Patrick Cordwell.





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