A Senate committee examining supermarket prices handed down its final report on Tuesday, May 7, laying out 14 reform recommendations.
The report called for divestiture laws to break up the supermarket duopoly of Coles and Woolworths, should supermarkets carry out "unconscionable conduct".
"The supermarket duopoly in this country is operating without proper oversight and restraint, thanks to outdated and ineffectual consumer and competition law," it said.
"Divestiture powers would be an important final step in competition regulation, to be drawn on when all else fails."
The Greens-led inquiry also called on the Albanese Government to establish a price and competition commission to examine the practices of supermarkets and other industries.
It also recommended the Food and Grocery Code of Conduct, which governs the relationship between supermarkets and suppliers, be made mandatory by September 30, taking in codes of conduct for dairy and horticulture.
The existing code is voluntary and a separate review by former Labor minister Craig Emerson also pushed for mandatory rules.
Other recommendations included giving the consumer watchdog powers to investigate land banking, whereby supermarkets purchase land with no intention of developing it, to stop competitors using the site.
The inquiry's chair, Greens senator Nick McKim, said the recommendations would force large supermarkets to be fairer to customers at the check-out.
“This would mean corporations couldn’t just arbitrarily increase prices without facing consequences from the courts," he said.
“This would be a significant new power to stop unreasonable pricing that has been rampant for years because of a lack of competition.”
The Albanese Government had previously dismissed the idea of divestiture laws.
In a statement, Woolworths said it supported a mandatory Food and Grocery Code of Conduct and was ready and willing to co-operate.
"We will take the time to review the report and we will continue to engage constructively with the other inquiries and reviews under way," a spokesman said.
Coles was contacted for comment.
What the inquiry said
The committee has made 14 recommendations to prevent companies from abusing their market power. They are:
- Create divestiture powers for supermarkets if they have been found guilty of misusing their market power or engaging in unconscionable conduct.
- Ban price gouging.
- Establish a separate Commission on Prices and Competition which would examine price setting practices of supermarkets and other industries and review restrictions on effective competition which are leading to high prices.
- Enable the Australian Competition and Consumer Commission to investigate and prosecute unfair trading practices.
- Make the Food and Grocery Code of Conduct mandatory, with penalties for breaches and protections against supplier retribution, by the end of September.
- Include in the Food and Grocery Code of Conduct greenlife industries and any large retailers that stock food and/or grocery products.
- Toughen merger restrictions, including mandatory notifications to the ACCC and reverse the onus so that companies have to prove that a merger would not lessen competition.
- Give the ACCC powers to investigate and make recommendations to government on land banking in the supermarket sector.
- Force supermarkets to standardise unit price information, stop promoting fake discounts and disclose changes in the price or size of a product.
- Boost funding to the ACCC so it can properly regulate, investigate, enforce and prosecute competition policy matters and give it powers to compel whatever information it requires as part of its investigations.
- Update the National Food Wastage Strategy to improve use-by and best-before labels and require regular data to be published on food waste volumes.
- Call on supermarkets to protect employees from customer abuse.
- Refer another committee to examine the role of multinational food manufacturers and Australia's ‘big box’ retailers — in particular Bunnings — in price setting.
