Supermarkets would be prohibited from price gouging and face stricter rules on land banking, should the government adopt the recommendations of the Senate Select Committee on Supermarket Prices.
The committee published 14 recommendations, which include creating divestiture powers specific to the supermarket sector and prohibiting the charging of excess prices, otherwise known as price gouging.
The committee noted that it heard unfair trading practices arising from the so-called supermarket duopoly of Coles and Woolworths.
Moreover, the committee emphasised the need for merger reforms, which should include banning land banking.
The Australian Securities and Investments Commission defines land banking as a ‘real estate investment scheme that involves buying large blocks of undeveloped land,’ which the committee said supermarkets do to reduce competition, particularly in greenfield sites where new suburbs are being developed.
Currently, Woolworths holds around 50 development sites and Coles around 60, with some acquired decades ago.
Other recommendations from the committee include making the Food and Grocery Code of Conduct mandatory, amending the Unit Pricing Code, and providing the Australian Competition and Consumer Commission with “sufficient funding” to regulate, investigate, enforce and prosecute competition policy matters.
The committee also wants the Department of Climate Change, Energy, the Environment and Water to update the 2017 National Food Waste Strategy to include a best-practice, nationwide approach to addressing food waste in the supermarket chain.
In addition, the committee urges supermarkets to do more to improve the health and safety standards for supermarket employees.
The Greens expressed support for the recommendations, noting the importance of breaking the duopoly to ensure proper pricing that will benefit consumers.
“This is a landmark report with serious proposals to tackle the price of food, and the profiteering that has done so much harm to the people of Australia,” said Greens committee chair Senator Nick McKim.
However, Labor’s Glenn Sterle and Louise Pratt expressed dissenting opinions, saying the divestiture power “may significantly reduce a firm’s general efficiency and viability”.
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