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Coles (ASX:COL) and Woolworths (ASX:WOW) have come out swinging against the federal government’s plan to impose stricter rules on Australia’s major supermarkets in a bid to curb the “excessive pricing of groceries.”
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Anthony Albanese’s gov’t has been striving to lower the price of weekly shops for some time now, and is taking further action on price gouging.
The latest regulations are aimed at larger retailers – Coles and Woolies, of course, among them, as well as Aldi and others – overcharging through shelf prices that outstrip how much supplying them is actually costing.
“This is all about getting a fairer go for families in their weekly shop,” the reigning Treasurer, Jim Chalmers, declared while unveiling the rules.
The regulations come into effect in July, when supermarkets would then face fines upwards of $10 million per breach. The Market Link understands other penalties may charge offenders “three times the value of the benefit derived.”
Coles was the first of the two Australian heavyweights to hit back, warning the impending regulations would hit their customers right in the pocketbooks.
“At a time when the focus should be on easing cost-of-living pressures, these regulations risk doing the opposite,” a spokesperson declared. “For every $100 customers spend at Coles, we make around $2.43 in profit.”
Woolworths’ argument also focused on how the rules would impact daily punters, with Woolies’ spokesperson suggesting the “unprecedented targeting” may create a butterfly effect that would mean it can no longer offer strong deals. They also warned it would “create an uneven playing field” in the space.
The duo – which the ACCC said has created a near-duopoly together during an investigation last March – found allies in the Business Council of Australia and the Aussie Retailers Association, both of whom spoke out.
The latter’s chief, Chris Rodwell, said his organisation would “strongly oppose” the ban and echoed Coles and Woolworths by claiming any regulations laid down by the gov’t next year would only raise shopping prices.
The whole affair has investors edgy: COL is down -1.1% this week, while WOW shares have actually gained close to +0.5% since Monday’s open.
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