Supermarket and hardware chains could face being broken up as a “last resort” for repeated price-gouging under a Coalition proposal to crackdown on the grocery sector.
Tuesday’s announcement has also been welcomed by the Greens, but has been criticised as “half-baked” by the treasurer, Jim Chalmers, who claimed it could make the competition problem worse not better.
The Coalition’s pledge goes further than the Labor government’s response to concerns about duopoly power and rising prices for food and essentials. Following a review by the economist Craig Emerson into the grocery code of conduct, Labor last month promised to legislate massive new fines for breaches of up to $10m or 10% of turnover in the preceding 12 months.
The Coalition would preserve those penalties but add the potential of forcing the breakup of big firms in the grocery and hardware sector, if ordered by a court – a step the review did not recommend, and which Labor has strongly resisted. The Coalition would also create a supermarket commissioner.
Announcing the policy alongside the opposition leader, Peter Dutton, and Nationals leader, David Littleproud, the shadow treasurer, Angus Taylor, said there would be several “safeguards” to be applied before divestiture could be considered.
Taylor said the power would only be applied where divestment “can lead to a substantial improvement in competition”, and a public interest test that would apply to ensure any benefits of divestment would not be outweighed by loss of jobs or significant loss of shareholder value.
“We know that internationally there’s examples of divestiture, which means that where there’s an abuse of market share or that power, then there’s a consequence to pay for that – and we have taken a decision as a Coalition to support a regime that allows for divestiture,” Dutton said.
Emerson’s review found there “could easily be greater market concentration” if divestment saw a rival supermarket chain buy up former stores of a rival, or if those stores remained unpurchased. Emerson concluded that divestment threats would not be an effective deterrent.
Dutton rejected Emerson’s claims at his press conference, noting the Australian Competition & Consumer Commission chair, Gina Cass-Gottlieb, had backed divestment powers.
The Greens have long pushed for divestment powers to break up the big supermarkets. Senator Nick McKim, the party’s economic spokesperson who chaired the Senate select committee on supermarket prices, welcomed the Liberals’ backing of the policy.
“Labor is now isolated as the only party allowing the big supermarket corporations to continue to misuse their market power and price-gouge Australian shoppers,” he said in a statement.
“The Coalition’s support for divestiture powers in the supermarket sector makes this a moment of choice for Prime Minister Albanese. He can either keep holding hands with Coles and Woolworths, or he can side with Australian shoppers.”
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“The numbers are now there to pass laws through the Senate. The Greens are ready and willing to work constructively to urgently deliver cheaper food and groceries.”
In parliament on Tuesday afternoon, Chalmers dismissed the Coalition announcement as “chaotic”, saying they had not outlined details of how it would work.
“The food and grocery code, when it looked at this matter, said that the risk was that it could actually make things worse, not better … we might see less competition, not more competition,” Chalmers said.
“Previous competition reviews, all the way back to 1993 and 2015, didn’t recommend it, because this is the usual half-baked idea to cover up for the last half-baked idea.”
Both major parties are emphasising cost-of-living issues in the lead-up to the next election which is due by May 2025 but could be called late this year. Dutton told the Coalition party room today there would be “more to say in the coming weeks” on energy, cost of living and social policy.
“Colleagues should rest assured that work is well under way,” Dutton said. He told colleagues to “be ready”, seen as a reference to a possible early election.
