Australia watchdog sues two big grocery chains for duopoly

In Australia, a watchdog sues two grocery chains on Monday, September 23, 2024, alleging some “discount” offers were more expensive than original prices. STOCK PHOTO

SYDNEY — Australia’s competition watchdog sued the country’s two biggest grocery chains on Monday, alleging “discount” offers on hundreds of staples were more expensive than original prices.

The regulator said Woolworths and Coles – which together hold about 65 percent market share – had deliberately jacked up prices for toothpaste, yogurt, butter, instant coffee, tampons, and more.

These temporary price spikes were then reduced in widely touted discount offers, which were higher than the original cost of the goods.

The Australian Competition and Consumer Commission pointed to a family packet of Oreo biscuits, which typically sold for Aus$3.50 ($2.39).

READ: Australia launches competition, pricing review in grocery sector

Woolworths lifted the price to Aus$5.00 before promoting a “Prices Dropped” promotion of Aus$4.50 – one dollar higher than originally advertised.

“We allege that each of Woolworths and Coles breached the Australian consumer law by making misleading claims about discounts, when the discounts were, in fact, illusory,” said commission chair Gina Cass-Gottlieb.

Both grocery chains had “sold tens of millions of the affected products and derived significant revenue from those sales”, Cass-Gottlieb said.

“The false or misleading representations concerned the price of household staples at a time of increasing cost of living pressures,” reads an outline of the commission’s legal case.

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Woolworths and Coles could be fined up to Aus$50 million ($34 million) a piece if the Federal Court rules against them.

Australia has one of the most concentrated grocery sectors in the world.

This virtual duopoly has given them almost unfettered power to set prices as they please, reaping significant profits over the years.

A cost-of-living crisis has heaped political pressure on the Australian government for supermarket reform, with a separate inquiry into pricing currently underway.