Supermarkets Now Allowed to Work Together to Keep Shelves Stocked

Key Points:

  • The ACCC has flipped on its anti-collusion rules to allow supermarkets to streamline deliveries.

  • The watchdog will ensure that supermarkets do not conduct 'price gouging'

  • Aldi, Coles, Woolworths and IGA will be able to work together to ensure a stable supply of groceries.

The Australian Competition and Consumer Commission (ACCC) has reversed one of its key policies on collusion that will now allow supermarkets to work together in the face of growing demand from panic buying to keep shelves stocked, and the public calm.

Previously, the ACCC had a strict set of rules in place to ensure that supermarkets and suppliers were not able to work together on supply and pricing, otherwise known as collusion, which was punishable by large-scale fines by the competition watchdog. This was largely because, with supermarkets colluding together, they had the ability to price gouge the buying public on popular goods, pricing a number of less affluent shoppers out of basic necessities.

According to a report from the ABC, “the authorisation, granted on Monday afternoon after the coordinated application last Friday, does not allow supermarkets to agree on retail prices for products,” in the hope of mitigating the chance of this price gouging.

The move comes after unprecedented demand in supermarkets from a panicked public, buying up large numbers of some staples in the case of a nation-wide lockdown. The ACCC’s move is a temporary one, which now allows supermarkets to coordinate “when working with manufacturers, suppliers, and transport and logistics providers.”

The measure applies to Aldi, Woolworths, Coles and Metcash who runs the IGA supermarkets across Australia.

In a statement, the ACCC said that the temporary reversal of policy would “ensure the supply and the fair and equitable distribution of fresh food, groceries, and other household items to Australian consumers, including those who are vulnerable or live in rural and remote areas.”

Rod Sims, Chair of the Australian Competition and Consumer Commission said that “Australia’s supermarkets have experienced unprecedented demand for groceries in recent weeks, both in-store and online, which has led to shortages of some products and disruption to delivery services.”

Jonathan Brown, a consumer advocate with Choice has said that so long as the aftermath of the decision is well-monitored by the consumer watchdog, the change in policy looks set to benefit consumers.

“With a well-resourced regulator supporting these markets, supermarkets cooperating to get products on our shelves is a huge positive,” he said.

The move has come under fire from some consumers concerned about the potential for price gouging, which they allege has already taken place. The ABC’s report interviews Carly Sutton who says the price of her grocery shop has increased from the usual $70 a week.

“I would say the meat pack is usually $80 to $90, I think it’s gone up to maybe $130,” she said. “The budget has gone out the window… I understand this affects everyone and you’ve got to pay extra, but this is ridiculous,” she concluded.

A spokesperson from Coles denied this, stating that “there has been no increases in our prices as a result of COVID-19.”

Shaun Lindhe of AUSVEG, a group that represents a collective of 5,000 farmers confirmed he had heard no reports of price gouging, suggesting that there are a “complex” number of reasons why the price of certain produce may have increased, including a drought-filled summer and sudden demand raising the price of labour, transport and logistics. “That’s reflected in the supermarket prices, too,” he said.

Woolworth’s chief executive Brad Banducci has issued a statement to the ASX stating that the company’s retail business is strong, adding that “what we’ve been facing until now, is a short-term shock to the system driven by unprecedented demand.”

“Collectively, our industry is more than capable of providing enough food for everyone in both countries [Australia and New Zealand]. We’ve been pleased to see early signs of moderation in shopping behaviour in our supermarkets over the weekend and it’s heartening to see customers respecting product limits in store so more members of their local community have access to these items they need.”

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