Break-up, sell-off of national supermarkets ruled out

An inquiry has found Coles, Woolworths and ALDI are among the most profitable supermarkets in the world but has stopped short of recommending they be broken up or forced to sell assets.

The Australian Competition and Consumer Commission (ACCC) said the three supermarket businesses were among the most profitable among their global peers and their average product margins had increased over the last five financial years.

Publishing a report into pricing and competition in Australia’s A$140 billion (US$88 billion) supermarket sector, then ACCC made 20 recommendations, including clearer pricing practices, greater transparency for suppliers and reforms to planning and zoning laws.

“There is no ‘silver bullet’ that will address all the issues we have identified in the supermarket sector, but we are confident that our recommendations will make a difference for consumers, will equip suppliers to make more informed business and investment decisions while bearing a more appropriate level of risk, and will boost competition in the sector,” ACCC Deputy Chair Mick Keogh said in a media release.

In its initial response, The Australian Government said it would provide $2.9 million to help suppliers stand up to the big supermarkets but the 441 page report did not support a divestiture power or the claim that breaking up supermarkets would help consumers.

The funding would go to fresh produce industry associations to deliver targeted education programs, ensuring suppliers understand and can enforce their rights under the Food and Grocery Code.

“This is about ensuring Australians aren't treated like mugs by the supermarkets,” Treasurer Jim Chalmers said in a joint media release with other ministers.

Keogh said the ACCC heard from more than 20,000 consumers, received more than 100 public submissions, held eight supplier roundtables, reviewed tens of thousands of internal documents, conducted private hearings and ten days of public hearings, and analysed billions of points of supermarket data.

“Based on this extensive analysis we have recommended a range of measures to improve conditions for competition in the sector and deliver better outcomes for consumers and suppliers,” he said.

The ACCC’s 20 recommendations in its Supermarkets inquiry: February 2025 final report, are:

1. Governments consider support for community-owned stores in limited choice (particularly remote) areas with appropriate governance
2. Supermarkets publish pricing information
3. Governments address planning and zoning issues
4. Supermarkets be subject to minimum information requirements for discount price promotions, supported by record keeping obligations
5. supporting the Government’s consultation about Unit Pricing Code proposed changes
6. Supermarkets publish notifications when package size changes are adverse for consumers
7. Coles and Woolworths provide members with periodic loyalty program information summaries
8. Coles and Woolworths’ loyalty program practices be reviewed in three years
9. strengthen complaints handling mechanisms in remote locations
10. Supermarkets not negotiate out of key minimum protections in the Food and Grocery Code
11. Harmonisation of accreditation and auditing requirements
12. ALDI, Coles and Woolworths provide fresh produce suppliers with detailed information about their supply forecasts
13. ALDI, Coles and Woolworths provide fresh produce suppliers with greater transparency about weekly tendering processes they use to negotiate price and volumes with suppliers
14. Greater transparency about supermarkets wholesale fresh produce prices
15. ALDI, Coles and Woolworths not be able to unilaterally reduce wholesale fresh produce prices or volumes agreed with suppliers
16. Greater transparency for growers who sell fresh produce through intermediaries
17. Suppliers of supermarket branded fresh produce to supermarkets have earlier certainty about orders
18. Suppliers be allowed to apply their own branding to fresh produce
19. greater transparency about the rebates suppliers pay to supermarkets, and
20. Coles and Woolworths should be more transparent about how supplier funding contributions to their inhouse retail media services are used.