Government Says No to Dismantling Coles and Woolworths

With cost-of-living pressures rising, consumers have been calling for the grip of the two major players to be loosened, but the government has rejected this.

A Woolworths truck is parked outside a Coles Supermarket on May 25, 2015 in Melbourne, Australia. Photo by Quinn Rooney/Getty Images

Assistant Competition Minister Andrew Leigh has ruled out the government breaking up Woolworths and Coles as a way to increase competition in the supermarket sector.

Instead, Mr. Leigh said the government was “really focusing on things that are going to make a direct difference,” such as directing the Australian Competition and Consumer Commission (ACCC) to review prices and competition in the sector, and appointing former Labor minister Craig Emerson to review the effectiveness of the grocery code of conduct, which governs how the supermarket giants treat their suppliers.

“We’re not looking at divestment powers at the moment,” he said. “Where you see them in other countries, they’re very rarely used, and they’re not a priority that we’re focusing on at the moment.”

The supermarket chains both recorded profits of more than $1 billion (US$656 million) in 2023.

Staff Are Being Attacked

This is despite the fact that some consumers are now so angry about prices that they are increasingly attacking supermarket staff, according to Coles chief executive Leah Weckert.

Nationals leader David Littleproud has called for divestiture powers to help increase competition in the sector, as households struggle to balance strained budgets caused, in part, by high food prices. He referred to the “extraordinary” mark-ups on food and the gap between supermarket prices and the price paid to farms.

“We saw it with the beef prices where we saw a 60, 70 percent reduction at the farm gate, but only an eight percent reduction at the checkout and the same’s happening with fruit and vegetables, melon producers getting paid a $1.50 a kilogram, yet they’re charging over five dollars,” he said.

Support for Action

Allan Fels, former head of the ACCC who has also been leading an investigation by the Australian Council of Trade Unions (ACTU) into price gouging, agreed with Mr. Littleproud, saying it was “about time” for the Commission to have another look into pricing practices. That was also supported by the National Farmers Federation, which claimed 30 percent of growers were considering leaving the industry this year.

Australia’s annual food price inflation edged down to 4.5 percent in the fourth quarter of 2023, from 4.8 percent in the previous three-month period. The latest figure marked the lowest level since the first quarter of 2022.

According to Trading Economics analysts’ expectations, food inflation in Australia is expected to be 3.50 percent by the end of this quarter. In the long-term, it is projected to trend around 1.90 percent in 2025 and 2.00 percent in 2026.

Food price inflation in Australia from 2021 to January 2024. Courtesy TradingEconomics.com

AAP contributed to this report