ACCC to examine supermarket prices in new inquiry

The federal government will direct the Australian Competition and Consumer Commission to examine the supermarket sector, including its pricing practices and the relationship between wholesale, including farmgate, and retail prices.

The ACCC last carried out a competition examination into the supermarket industry in 2008.

Addressing the National Press Club, Prime Minister Anthony Albanese, announced Treasurer Jim Chalmers would direct the ACCC to start probing the differences between prices paid for fresh produce bought from farmers by major retailers and what customers pay.

"When farmers are selling their product for less, supermarkets should charge Australians less," Mr Albanese said.

His announcement comes amid claims the Coles and Woolworths retail duopoly has been price gouging on fruit, vegetables and meat.

The inquiry will also look at how online shopping and loyalty programs as well as technology are affecting competition in the industry.

"The ACCC has significant powers, and it is the best and most effective body to investigate supermarket prices," Mr Albanese said.

The Prime Minister said the government would also give further funding to consumer group, Choice, to provide information to shoppers on supermarket prices.

"Across thousands of products, it can be hard for people to find the best deal," he said.

"We are backing Choice, renowned for their commitment to consumer fairness, to provide regular information on prices across a basket of goods.

"This will promote transparency, enhance competition and drive value."

ACCC chair, Gina Cass-Gottlieb, said the commission recognised grocery prices had become a major concern for millions of Australians experiencing cost of living pressures.

Many farmers were also concerned about a weak correlation between prices they received for their livestock and produce crops and the price consumers paid at the checkout.

"We will use our full range of legal powers to conduct a detailed examination of the supermarket sector," Ms Cass-Gottlieb said.

The National Farmers Federation welcomed the announcement as good news for producers who had long called for greater transparency from the big retailers.

In a statement the peak farmer advocacy body said the ACCC could deploy its powers to compel information to form a clear picture of paddock to plate pricing, and what was fair for both farmers and consumers.

"We need the ongoing commitment of government to act on any outcomes from this inquiry - we've seen past reports collect dust on shelves in Canberra," it said.

"We need sustained political leadership and action."

While awaiting the ACCC's findings, NFF called on the government to maintain its momentum on broader competition reforms which would create a fairer policy environment for farmers.

The ACCC investigation will be different to the government's recently announced review of the Food and Grocery Code of Conduct, which relates to the conduct of retailers and wholesalers towards suppliers.

That review is being overseen by former Labor minister and director of national animal protection charity group, Alliance for Animals, Craig Emerson, and will look at whether the code should be mandatory.

The code of conduct regulates the conduct between supermarkets and suppliers and is voluntary, but the review will look at whether it should be mandatory.

Meanwhile, a separate Senate inquiry is also expected to begin hearings in February, also looking at prices at supermarket checkouts.

Following the ACCC's 2008 inquiry, Coles and Woolworths provided enforceable undertakings to remove restrictive tenancy provisions that may have prevented shopping centres from leasing space to competing supermarkets

The ACCC's investigation had identified more than 700 potentially restrictive leases.

Deputy chairman and head of the ACCC's agricultural unit, Mick Keogh, believed the watchdog was well placed to conduct a fresh broad-ranging inquiry.

"We will bring to bear our expertise in competition, consumer law, agriculture and the supermarket sector in particular," he said.

"Competitive markets encouraged more attractive combinations of price and quality for consumers, as well as greater choice

"Our inquiry will examine the nature of the current competitive environment between supermarkets, as well as the barriers to greater competition and new entry in the sector."

The Nationals leader, David Littleproud, welcomed the inquiry but said Labor had been shamed into action.

"Labor could have started the ACCC investigation before Christmas but didn't understand the scale nor severity of their cost-of-living crisis," he said

The ACCC expects to start seeking views on the key issues it will consider in this inquiry next month.

- With Australian Associated Press