The Federal Government has released exposure draft legislation that would prohibit excess pricing practices or “price gouging”.
Objective of the proposed reforms
The aim of the reforms is to address the ACCC’s view that there are significant barriers to entry in the supermarkets sector and that supermarket giants such as Coles and Woolworths have limited incentive to compete on price. If passed, the new law will help protect consumers against the risk of major supermarkets charging excessive prices, with a view to ensuring a better deal at the checkout counter for Australians.
Overview of the Proposed Legislation
Under the proposed law, supermarkets with substantial market power could face penalties of:
- $10 million; or
- three times the benefit obtained; or
- 10% of annual turnover, whichever is greatest.
Why it matters?
The proposed legislation is part of a broader agenda to promote competition and transparency in Australia’s grocery sector.
The Government’s reform seeks to bring Australian competition law closer to the United Kingdom and European Union where regulators would assess whether prices set by dominant firms are unfair when compared to market conditions.
How the Law Would Operate
If enacted, courts would assess potential breaches by reference to factors such as:
- the cost of supply and distribution;
- the maintenance of a reasonable price mark-up; and
- comparisons with pricing in more competitive markets.
What Businesses Should Do
Although the law targets major supermarkets, its introduction signals a broader regulatory trend toward price accountability in concentrated markets.
Businesses with substantial market share should:
- review pricing and governance frameworks;
- document cost inputs and rationale for price changes; and
- prepare to engage with the ACCC during consultation or enforcement if required.
Next Steps
The consultation period expired in early November. The Government now intends to finalise the legislation by the end of the year.
This reform, together with the mandatory Food and Grocery Code of Conduct (effective as at 1 April 2025), reflects the Government’s continued focus on consumer protection and promoting competition in essential goods markets.
If your business could be impacted or you want to ensure compliance with competition law, our team at Baybridge can provide clear, practical guidance. Contact us Now
