Coles and Woolworths are among the most profitable supermarkets in the world, the consumer watchdog has found.
A 12-month inquiry by the n Competition & Consumer Commission (ACCC) showed that both supermarkets had increased their margins in recent years, especially Woolworths.
Average profits had risen to as high as 43 per cent for potatoes, 38 per cent for cucumbers and 35 per cent for bananas, with suppliers left in a weak bargaining position.
The report released on Friday found that there is far less competition in than overseas, making the supermarket sector ‘oligopolistic’.
‘Coles and Woolworths have limited incentive to compete vigorously with each other on price,’ it said.
‘We have not observed Coles and Woolworths seeking to substantially discount prices below each other in aggregate.’
It added that ‘Aldi, Coles and Woolworths appear to be among the most profitable supermarket businesses globally’.
‘Coles’ and Woolworths’ market shares are increasing and they face no rivals of comparable scope and scale.’
But the ACCC didn’t declare that Coles and Woolworths had a duopoly, and stopped short of calling grocery prices ‘excessive’.
It also didn’t lay the blame for a cost of living crisis at the supermarkets’ feet.
Politicians including Anthony Albanese lashed out at supermarkets during soaring inflation after Covid.
But the ACCC found that while grocery prices have risen 24 per cent over the past five years, other goods and services have also increased by 22 per cent.
No smoking gun was found for allegations of price gouging, with the report instead suggesting there was room for more competition in the industry.
‘If the market shares and associated market power of Coles and Woolworths continue to increase in the future, their margins as a percentage of grocery prices can also be expected to continue to grow.’
The watchdog made 20 recommendations, which included making pricing data public, and more scrutiny of discounting claims.
‘s grocery trade is dominated by Woolworths with 38 per cent of sales, Coles (20 per cent), Aldi (9 per cent) and Metcash-linked independents such as Foodland and IGA (7 per cent).
For competition:
– Large chains to publish prices online
– Very large chains to provide dynamic pricing via API
– Steamline planning and zoning
– Importance of new merger laws and specific treatment of supermarket acquisitions
For suppliers:
– Enhanced forecasts
– Transparency of weekly tendering
– Transparency of rebates
– Food and Grocery Code enhancements
For consumers:
– Regulation of promotional tickets
– Shrinkflation notifications
– Transparency of loyalty program value
– Review of loyalty programs in three years
For remote :
– Support community-owned supermarkets
– Complaints handling
– All stores to display prices in-store
– Fair trading bodies to monitor display of prices and complaint information