The Australian Competition and Consumer Commission’s inquiry into grocery prices has found the drought, soaring input costs and rampant international food inflation are to blame for a sharp rise in grocery prices in the last five years – not a lack of competition between the big supermarket chains.
But the Rudd Government will adopt several of the ACCC’s recommendations to improve competition in the sector. These include:
- The introduction of mandatory unit pricing on grocery shelves, whereby retailers will be required to show the price per gram, kilo or millilitre.
- New laws to prevent creeping acquisitions, whereby supermarket chains quietly acquire small rivals.
- The establishment of a Grocery Watch website to monitor prices on a monthly basis.
- Changes to local zoning and planning laws that discourage competition.
- Changes to the Horticulture Code of Conduct, which regulates trade between food growers and traders.
Assistant Treasurer Chris Bowen says the ACCC found the grocery market was “workably competitive” but competition could be increased. “The report finds that although the major supermarket chains, Coles and Woolworths, do compete on price, that competition is not as vigorous as it could be,” Bowen said yesterday.
The recommendations – most of which had been foreshadowed before the release of the monster 642 page report – have been welcomed by consumer groups.
Choice spokesman Christopher Zinn applauded the mandatory pricing initiative. "The greatest savings will come to those who engage with the initiatives. Unit pricing will help consumers make significant savings if they use it to pursue the best value between brands and supermarkets.”
But Australian Retailers Association chief Richard Evans dismissed the new competition measures as spin.
“Anyone who thinks grocery prices will be reduced after this inquiry mustn't understand the complexity of the retail market. Placing restrictions and additional compliance requirements on the retail market will only increase costs for retailers.”
Evans said the ACCC has proven that Australia’s grocery sector is competitive and was not in need of a regulatory shake-up. "This inquiry has been effective. It proves Australian retailing, with a couple of tweaks, is world's best practice."
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