Major Supermarket Chains Woolworths and Coles Dominate Australia’s Market, Says ACCC Interim Report

The Australian Competition and Consumer Commission (ACCC) has identified Woolworths and Coles as major players in an “oligopoly.”

According to the 265-page interim report released on Sept. 27, the supermarket giants have experienced a loss of consumer trust, with nearly half of the respondents expressing concerns about prices, up from 17 percent in 2008.

Key issues include deceptive pricing practices, penalties associated with loyalty programs, and a lack of bargaining power for suppliers.

The report also addresses growth limitations in the supermarket industry, with Coles and Woolworths indicating that land availability may be restricted due to delays in rezoning. Concerns about “land banking” also pose obstacles for new market entrants.

In November, the Commission will summon supermarket executives for a public inquiry.

According to the report, Woolworths and Coles control 67 percent of the supermarket retail sales nationally, with Aldi accounting for 9 percent and Metcash-backed independent supermarkets at 7 percent.

On Sept. 22, ACCC initiated a court case against both companies for violating Australian Consumer Law with misleading “discount pricing” claims on numerous common supermarket items.

Mick Keogh, ACCC Deputy Chair, stated that the current oligopoly market structure may discourage competitive pricing.

“Woolworths and Coles offer a similar experience to customers through product ranges, pricing, and non-price offerings like loyalty programs,” Keogh noted.

Prime Minister Anthony Albanese welcomed the interim report, emphasizing the importance of the inquiry initiated earlier this year.

He highlighted the government’s efforts to ensure fair prices for consumers and suppliers.

Assistant Minister for Competition Andrew Leigh stressed the significance of competition in fostering dynamism and wage growth.

The final report, due in February 2025, will delve into further aspects of the supermarket business.

For now, the commission is examining 14 products in detail, including meat, fruits, vegetables, dairy products, and household items.

Consumer Perspectives

Many consumers have expressed distrust in supermarket pricing, with almost half comparing prices between stores before making purchases.

“Consumers are losing trust in supermarket pricing claims,” Keogh remarked, highlighting concerns about sales tactics like special offers, bulk promotions, and loyalty program pressures.

Suppliers, on the other hand, have raised issues about their limited negotiating power, pointing to unfair deals and stringent requirements imposed by major retailers.

Market Challenges

The report also outlines the market challenges faced by supermarkets, with ALDI taking two decades to reach a 9 percent market share.

Land availability and zoning laws are cited as obstacles in developing new stores, potentially hindering market competition.

Woolworths and Coles have acknowledged holding land for extended periods due to various factors.

Further analysis and investigation will be conducted as the Final Report is prepared.