The Australian Competition and Consumer Commission (ACCC) is taking legal action against major supermarket chains Woolworths and Coles, alleging they engaged in price gouging by artificially inflating prices on products like Strepsils and Oreos before offering them at a 'discounted' price. This occurred during a period of high inflation in Australia (December 2022), where food inflation reached 9.2 percent.
The ACCC's actions challenge claims from experts that price gouging was not a significant contributor to inflation. The case has political implications, particularly impacting the business sector which recently criticized the government's approach to tackling inflation. The timing of the lawsuit is notable, coinciding with the government's release of a mandatory supermarket code of conduct and CHOICE's upcoming report on supermarket prices.
The ACCC's strong stance sends a clear message that it is prepared to pursue large companies for anti-competitive practices. This action might deter other businesses from using general inflation as a justification for raising profit margins.
The Down Down sticker was then plonked on the front of the lozenges at the “discount” price of $6 on November 9.
Woolworths is alleged to have done something similar on Oreo family packs between November 28 and December 20, taking the price from $3.50 to $5 before selling them at a “discounted” $4.50.
All of this occurred in the December quarter of 2022 when inflation reached a peak of 7.8 per cent. Food inflation lifted by 0.9 per cent that quarter, taking the annual rate to 9.2 per cent. Prices for some goods, such as biscuits, were climbing at more than 10 per cent.
Just a few weeks later, the RBA lifted the official cash rate to 3.35 per cent.
Loading
High-priced Strepsils and Oreos were not the only reasons for the RBA’s decision.
But if the ACCC’s argument is proved, it does undermine all the experts and economists who claimed there was no sign of price gouging causing inflation. The evidence, as mapped out by the competition watchdog, is sitting there in your kitchen cupboard.
Politically, the fact two such high-profile companies have been implicated hurts the business sector.
Last week, the Business Council of Australia ripped into the government for everything from red tape to industrial relations reforms with claims not enough was being done by Canberra or the states to reduce inflation.
Loading
Both Coles and Woolworths, which Cass-Gottlieb noted sell millions of products to millions of people, are council members.
It’s not going to get any easier for the sector. On the same day that the lawsuit landed, the government released its mandatory supermarket code of conduct for discussion while CHOICE is due to produce its latest quarterly report on supermarket prices later this week.
By taking this action, the ACCC is showing that – unlike other regulators – it is prepared to go hard with big cases. Any other business that thinks it can use general inflation to push up margins by lifting its prices will probably think twice after today.
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.
If you often open multiple tabs and struggle to keep track of them, Tabs Reminder is the solution you need. Tabs Reminder lets you set reminders for tabs so you can close them and get notified about them later. Never lose track of important tabs again with Tabs Reminder!
Try our Chrome extension today!
Share this article with your
friends and colleagues.
Earn points from views and
referrals who sign up.
Learn more