Treasurer Questions How Breaking Up Supermarket Giants Would Work

‘If you made supermarkets sell, are they allowed to sell to another big rival?’

Treasurer of Australia Jim Chalmers MP during post budget media interviews at Parliament House in Canberra, Australia, on May 15, 2024. Tracey Nearmy/Getty Images

The Albanese government is not interested in adopting powers to break up major supermarket companies, with Treasurer Jim Chalmers highlighting several issues with the approach.

It comes after the Liberal-National Coalition revealed it would back a Greens proposal to legislate government powers to “divest” supermarkets of their assets and stores if elected.

Mr. Chalmers was critical of the Coalition’s lack of detail around this policy.

“If you made supermarkets sell, are they allowed to sell to another big rival? Does it mean they close down more stores in local communities? And does that mean less competition rather than more competition in local communities?” he said on July 3.

Mr. Chalmers noted the steps the Albanese government had already made towards addressing competition issues.

“We funded [consumer advocacy website] Choice so that there’s more price transparency so that people can find and follow better deals. We’ve toughened the Food and Grocery Code; we’ve made it mandatory,” he said.

“We’ve dramatically increased the fines for the supermarkets who are doing the wrong thing.

“We have a whole broad suite of competition policy in our economy and in our supermarket sector.”

A ‘Last Resort’ Power

Coalition leader Peter Dutton said the divestiture plan was a “last resort” to tackle price gouging and competition issues.

Major supermarkets posting profits during the current cost of living crisis has spurred a wave of complaints about unfair pricing, unfair deals with farmers, and allegations of land banking.

“The situation in Australia at the moment is that there’s a massive concentration of market share within the two major companies, within Coles and Woolies,” Mr. Dutton claimed.

The move was a “clear message” that the Coalition stood with consumers and farmers, Mr. Dutton added.

Nationals leader David Littleproud said the three biggest supermarkets in Australia—Woolworths, Coles, and Aldi—make up about 74 percent of the market share.

“In the UK and U.S., their big three control about 30 to 40 percent of the market. So we have market concentration, and we are hearing the harrowing evidence from farmers who are being mistreated by supermarkets,” he said.

While both the UK and United States share common histories, their consumer markets differ markedly from Australia’s in terms of population and geographic size.

A New Supermarket Umpire

Under the Coalition’s plan, the Australian Competition and Consumer Commission will be able issue fines of up to $2 million, up from the current $187,800.

A Supermarket Commissioner role will also be established, which would hear complaints from farmers and suppliers, and conciliate between the parties.

Shadow Treasurer Angus Taylor noted that finding a balance was important.

“There’s some important safeguards we’re building into this initiative that are crucial to ensure that the balance is right, and distinguish this from other proposals that have been running around,” he said.

Earlier in February, Prime Minister Anthony Albanese likened the calls to break up the major supermarkets to the Soviet Union forcing businesses to sell assets to the state.

“We have a private sector economy in Australia and not a command and control economy. We’re not the old Soviet Union,” he told the ABC.

“So, we need to be very careful about the language that we use. And what we need to do is to put in place proper competition measures. That’s what the ACCC are looking at, constructive ways to go forward. And we will do that.”