Australia to ban supermarket price gouging in sweeping competition reforms

SYDNEY – Australia will ban supermarket price gouging from July 1, 2026, under a new law that the government says would protect shoppers from excessive grocery prices charged by major retailers.

Treasurer Jim Chalmers and Assistant Minister for Competition Andrew Leigh said the changes would make it illegal for “very large” grocery chains to charge prices deemed “excessive” relative to their cost of supply plus a reasonable margin. 

“This is all about getting a fairer go for families in their weekly shop,” they said in a statement released late on Dec 13. 

Penalties will be steep: as much as A$10 million (S$8.6 million) per violation, or three times the value of any benefit gained, or 10 per cent of annual turnover if that figure cannot be determined. 

The ban forms part of a broader effort to strengthen competition and transparency in the supermarket industry, which has faced sustained criticism amid persistent cost-of-living pressures.

The reforms follow a long-running investigation by the Australian Competition and Consumer Commission, which found that the grocery sector is among the most concentrated in the world, dominated by Coles Group and Woolworths Group in an effective oligopoly. 

Profit leaders

The watchdog reported in March that the major chains, along with ALDI, increased their average product margins over the previous five years, particularly on branded packaged food and household goods.

It also said that Australia’s largest supermarket groups rank among the most profitable globally.

The inquiry highlighted structural advantages enjoyed by the two dominant chains, including preferential access to new store sites and significant bargaining power over suppliers – factors it said limit competition and contribute to higher prices for consumers.

The government also flagged other reforms, including increasing the competition regulator’s funding by more than A$30 million to target harmful or misleading conduct in retail, and consulting on options to strengthen unit pricing rules and tackle “shrinkflation”. 

Coles said in an e-mail that it is committed to easing pressure on shoppers, noting that multiple inquiries, including the competition regulator’s own, “found no evidence of price gouging”. 

Input costs

Higher prices are being driven by rising input costs such as energy, fuel and freight, the company said, adding that Coles makes about A$2.43 in profit for every A$100 spent and warning that increased regulation “is likely to put upward, not downward, pressure on prices”.

Woolworths acknowledged the new rules but is focused on delivering value, with average prices in its food retail business declining for seven consecutive quarters, it said in an e-mail. 

The law is “unprecedented” in targeting only two Australian-owned companies, while “much larger, foreign-owned retailers” would not face equivalent restrictions, the company said.

The Australian Retailers Association also opposed the changes.

There is no evidence of excessive pricing and the laws risk pushing grocery prices higher by increasing compliance costs and uncertainty, chief executive officer Chris Rodwell said in an e-mail.

The Business Council of Australia criticised the ban as misdirected, pointing to data from the nation’s statistics bureau showing food prices rising more slowly than headline inflation.

Supermarket profit margins remain “modest” – about 2 per cent to 2.4 per cent in the 2025 financial year, chief executive Bran Black said, adding that additional regulation risks adding costs at a time of weak productivity growth. BLOOMBERG