Announcement date
14 December 2025
Link to announcement
Banning supermarket price gouging to protect Australian shoppers
Problem being addressed
The final report of the Australian Competition and Consumer Commission (ACCC) Supermarkets Inquiry published in March 2025 found that the supermarkets sector is an oligopolistic market structure in which the two largest supermarkets – Woolworths and Coles – have limited incentive to compete vigorously with each other on price. This creates the risk that Coles and Woolworths will price their grocery products excessively so that consumers pay more than they would in a workably competitive market, harming consumer confidence in the sector. Existing Australian laws do not provide effective safeguards against this risk occurring.
Proposal
On 30 March 2025, the Government made an election commitment to introduce legislation on an excessive pricing prohibition (EPP), as a cost-of-living relief measure to help Australian households.
Two options are considered in this Impact Analysis:
- Option 1: Status quo
- Option 2: Introduce an EPP into the Food and Grocery Code for very large retailers.
Option 2 introduces moderate compliance and administrative costs for Coles and Woolworths, with an estimated present-value cost of about $7.2 million. These costs arise from the additional governance, monitoring and training obligations and are considered proportionate to the policy objective.
Break-even analysis suggests even a small benefit to households would more than offset the estimated compliance costs for supermarkets. For the benefit to consumers to outweigh the compliance costs for supermarkets, households would have to benefit on average by $1.27 per household in present value terms. These benefits may arise through lower grocery prices for consumers. Greater price transparency will also improve consumer confidence in the fairness of supermarket prices.
Consultation feedback from consumers and advocates indicated broad public support for measures to prevent sustained excessive pricing, particularly noting the sector’s high level of concentration. Industry feedback reported concerns with the policy intent and emphasised the need for clarity in the law. The proposed approach aims to address concerns about clarity by incorporating a clearer standard for the prohibition where supermarkets are in breach if their prices are significantly in excess of the cost of supply and a reasonable margin.
Assessed Impact Analysis outcome
Adequate
Assessment comments
The IA addresses the seven IA questions and follows an appropriate policy development process commensurate with the significance of the problem and magnitude of the proposed intervention. To be considered Good Practice as per the Australian Government Guide to Policy Impact Analysis, the IA would have benefitted from greater depth of analysis and including further quantitative analysis of the likely costs and benefits.
Regulatory burden
The Treasury estimates the EPP will increase regulatory costs by $7.2 million (present value), over ten years.