The Business Council of Australia (BCA) welcomes the opportunity to provide a submission on the Making Supermarket Price Gouging Illegal – Draft Law Package.
The BCA represents and advocates for its members, who include many of Australia’s largest and most recognisable employers. As a member-led organisation, our submissions are informed by direct engagement with these members and reflect their expertise, insights, and practical experience across the Australian economy.
The BCA strongly opposes the introduction of these unnecessary and excessively interventionist regulations. Recent comprehensive analysis by the Australian Competition and Consumer Commission (ACCC) into the supermarket industry did not find evidence of price gouging by Australian supermarkets. To the extent the ACCC identified barriers to entry and expansion as the key determinants of competition in the industry, the proposal does not address this.
We strongly welcome the Prime Minister’s recent comments to lift investment by ‘clearing away unnecessary regulation that has accumulated over decades’, and the Treasurer’s commitment to seek Productivity Commission advice on benchmarking and targets for red-tape reduction in an Australian context. These proposed measures run counter to these commitments and risk undermining confidence in the integrity and predictability of Australia’s policy and regulatory environment. Moreover, the compressed timeframe and limited consultation process further erodes business confidence in the development of sound public policy. Through increasing red tape and compliance costs, this regime may instead cause the opposite to its intended effect and increase prices for consumers on-shelf.
While noting the government’s intention to proceed with regulation in this area, the BCA requests the
following:
- Implementation timeline: Impacted organisations should be provided 12 months to prepare and adapt to the new scheme, ensuring processes are appropriately calibrated to the specified record keeping requirements.
- Last resort mechanism: such measures should remain a last-resort mechanism to address genuinely unacceptable and anti-competitive pricing practices.
We note the following observations:
- There is no evidence to support the need for these regulations.
- The ACCC’s inquiry highlighted a range of supply-side cost pressures, including higher energy, fuel, labour, insurance, production, freight, and distribution costs, that have driven grocery inflation across the entire supply chain.
- Large supermarkets do not earn excessive profits.
- This type of regulation is excessive for a competitive marketplace.
- Supermarket pricing is complex and multifaceted.
The consultation paper specifically asks for feedback on three areas; our responses are outlined below:
| Consultation request | BCA Response |
|---|---|
| Whether they [the draft laws] are likely to achieve their intent as set out in the consultation paper? | In the absence of any substantiated evidence of price gouging and given the ACCC’s view that grocery inflationary pressures are not driven by excessive pricing, rather from supply-side inflationary pressures, it is difficult to see how these draft laws would address this issue. |
| The costs on industry of complying. | In our view, based on recent changes to the Food and Grocery Code, we believe this has the potential to result in significant indirect and direct costs for the major supermarkets. While assessments continue to be undertaken on the expected costs, we think it’s high likely that the net benefits of the package will be negative. |
| Whether they protect consumers without reducing supermarket businesses’ incentives to invest and innovate. | Introducing regulation that is clearly disproportionate to the identified risk will do nothing to address Australia’s productivity challenge. Instead, it would add to the already significant compliance burden facing Australian businesses at a time when there is broad consensus, as reaffirmed at the recent Economic Reform Roundtable, on the need to reduce unnecessary regulation and create a more supportive environment for productivity, growth, and investment. By increasing the costs and compliance burden on retailers, this regulation could actually lead to higher costs to consumers at the end of day. |